The Rent Is Too Damn High: The Affordable Housing Crisis, Explained

Years ago I was a renter. It was… fine? Every year my rent went up. But I also wasn’t responsible for major plumbing or any complicated shit like that.

Then my husband Bear suggested we really needed to stop renting and buy a place. Which sounded super responsible and adult and I wanted no part of it. We argued. It was very romantic.

Around the same time, there was this politician who ran for mayor of New York City. His name was Jimmy McMillan and he started a brand new political party: The Rent Is Too Damn High Party. His slogan? “The rent is too damn high.” You gotta admire the straightforward simplicity.

And as our rent was raised yet again, I thought… he’s right! The rent is too damn high. And it’s only getting higher.

We bought a house in simpler times

So Bear and I bought a house in the fall of 2014 for $290k. Classic 1920s bungalow: two bedrooms, one bathroom, a yard, detached garage, unfinished basement in a major American city.

Eight years later, that house is now worth $740k.

Did we build an addition? Gut it and renovate? Install all new appliances and cabinetry? Hardwood floors? A perfect lawn of green sod? NOPE! Aside from minor DIY renovations, hailstorm repairs, and necessary maintenance, the house is largely as it was when we moved in.

All we had to do to gain almost half a million dollars in equity was to just fucking sit on it.

In recent years the cost of buying a home in our city has exploded. So it’s a good thing the rent has stayed reasonably affordable, right? … right?

right???

If I can do it, so can you! Forget it

When we first started Bitches Get Riches, Kitty and I planned to write a comprehensive guide for buying your first home. It’s a dauntingly big task, so we put it off because we are nothing if not lazy, procrastinatory ne’er-do-wells. But now we’ve scrapped the idea altogether, despite multiple requests. The housing market has changed so much since Kitty and I bought our homes that any wisdom we have to impart would be frighteningly out of date and out of touch—two things these elder millennials have vowed never to be!

“Save up a 20% down payment!” said we, when that was somewhere south of $50,000. “Budget to spend less than a third of your income on your mortgage every year!” said we, when that was less than $20,000. These numbers are now as laughable as a Baby Boomer telling Gen Z they can easily pay for college if they “just get a summer job!”

Yeah. We’re going to need to recalibrate our home-buying advice for far more complicated times.

The affordable housing crisis is… a crisis

Set aside my anecdotal evidence about the affordability of rent and mortgages. The United States is currently in an affordable housing crisis. Enjoy these depressing stats, courtesy of the Pew Research Center:

  • The amount of available housing has dwindled as home prices have skyrocketed. Lotsa demand, limited supply!
  • The median home sale price has risen by over $100k during the last five years.
  • 9.9 million Americans spend 50% or more of their income on rent.
  • The average rent has risen by 18% over the last five years, far outpacing inflation.
  • The lack of affordable housing—both for renters and aspiring homeowners—has disproportionately hurt racial minorities and young people of all races.

In other words, it is now significantly harder for a 25-year-old American to make rent than it was for me ten years ago when I was that age. And if they’re struggling to make rent, it’s exponentially harder for them to save up a down payment to buy a home.

Why affordable housing fucking matters

[basic white dude voice] In Maslow’s hierarchy of needs, physiological needs like shelter form the base of the pyramid. Stable housing, secure shelter—it’s critical to have these on lock before we can progress to other, more advanced pursuits. In other words: if you’re constantly worried about getting evicted, you can’t really worry about anything else.

Affordable housing and systemic poverty

According to the National Low Income Housing Coalition, housing is the key to reversing a lot of terrible systemic problems:

  • Affordable housing reduces intergenerational poverty.
  • It increases economic mobility.
  • It’s the most cost-effective strategy for reducing childhood poverty.
  • Kids living in stable, affordable housing are more likely to thrive in school and earn more as adults.
  • It narrows the racial wealth gap.

Affordable housing and economic growth

But let’s say you don’t give a damn about the quality of life of The Poors™. Much like an increased minimum wage, greater access to affordable housing would be fantastic for the country’s precious economy too:

  • The NLIHC says that the lack of affordable housing costs our economy about $2 trillion a year in low wages and work productivity.
  • A shortage of affordable housing constrains people’s opportunities to increase their earnings, which slows the growth of our gross domestic product. The GDP growth between 1964 and 2009 would have been 13.5% higher, leading to a $1.7 trillion increase in income—$8,775 in additional wages per worker—if only there was more access to affordable housing.
  • Every dollar invested in affordable housing supports job creation and retention, boosting local economies.

If you want to bum yourself out about the human cost of the affordable housing crisis, read Matthew Desmond’s Evicted: Poverty and Profit in the American City. This sociologist embedded himself among the chronically evicted in Milwaukee and put a human face on housing instability.

And if you want to bum yourself out about the numerical losses of the affordable housing crisis, read the work of economist Raj Chetty, who showed that a child’s literal zip code could determine their future socioeconomic mobility. That’s right: stable housing in a higher-income neighborhood affects a kid’s likelihood of attending college and attaining a high-income job.

(And for those keeping score, yes, Raj Chetty is another data point in my noted attraction to progressive economists. Talk applied microeconomics to me, zaddy.)

Why are you like this???

Listen, I didn’t want to ruin your whole day with the affordable housing crisis. It’s not like I gain some kind of grotesque satisfaction by dragging you all kicking and screaming into my personal hell of anarcho-progressivist rage! I have our extremely depressing articles on reproductive rights for that!

But when it comes to the affordable housing crisis, we kind of only have ourselves to blame. And by “ourselves,” I mean homeowners (see above) and three hundred years of cultural indoctrination.

The American Dream, aka “This Fucker Again”

From Day 1 of our country, the Founding Fathers made sure everyone could vote. Wait, what’s that? [producer whispers in ear] Actually folks, I’ve just been informed that from Day 1 the only people who could legally vote were… land-owning white men. Renters of all genders and races could suck it up and stop being so poor if they wanted to vote.

Homeownership as a marker of prestige and worthiness is a time-honored tradition in the United States. Literally discriminating against people who can’t afford a home is as American as medical bankruptcy, foreign-made assault rifles, and a quarter-pounder with cheese! The rationale has been that owning a home means you have a vested interest in the community. If you own a home, you have something to lose. You’re “bought in.”

It thereby followed that homeownership became the central pillar of the American Dream. It was a marker of economic stability, community involvement, respectability, and generational wealth. Which is just one reason why historically, discrimination against minorities in the housing market has run rampant through things like redlining and contract buying.

Homeownership: a useful tool of societal control and oppression!

What’s the purpose of a home?

Adam Conover of the Factually! podcast did a great interview with Brookings Senior Fellow Jenny Schuetz on why housing is so expensive. Allow me to completely butcher her main point:

We’ve inappropriately redefined the purpose of owning a home.

We encourage homeownership not simply as a get-out-of-rent-free card or permanent Maslowian shelter… but as a financial investment.

How many times on this very blog have we talked about owning a home as a means of establishing wealth? How many times have we talked about it not just as a way to save money on rent, but as an appreciating asset and future investment? And way smarter people than us regularly encourage folks to invest in real estate through rental properties!

Theoretically, none of this advice is bad or wrong. Don’t hate the player hate the game, etc. But the concept of a home as an investment means that homeowners are deeply… um, invested in the value of their property. They need to keep housing expensive so that their investment in homeownership will eventually pay off.

And the local governments that control zoning? That approve things like the construction of affordable housing, multifamily dwellings, ADUs for extended family? They’re primarily staffed and lobbied by the very same homeowners interested in increasing their homes’ values by keeping housing expensive. Renters and aspiring homeowners don’t have nearly so powerful a voice in the decisions keeping housing unaffordable.

I’m not here to blame anyone beyond the vague concept of a system built long before we were born. After all: I own a house, and if I sold it today it would make me very, very rich.

The housing affordability movement: What we can do

The solution is obviously for everyone to learn to love bunk-bedding in a studio apartment well into their fifties.

But if you think people deserve things like privacy, a family, secure shelter, and the chance to build intergenerational wealth through property ownership, I guess there are a few other things we can do to solve the affordable housing crisis.

Legal solutions

There’s a lot we can do within local, state, and federal governments to ease the affordable housing crisis. The Fair Housing Act was a good first step in curbing discrimination in housing, but affordable housing activists are currently advocating for the following legal measures:

  • Changing zoning laws and reducing the red tape required to build new housing would make it easier to make affordable homes in structures like multi-story apartment buildings.
  • Requiring developers to include a certain percentage of low-income units in new apartment buildings.
  • Protecting existing low-income housing by making it harder to knock it down and replace with expensive homes like luxury condos.
  • Expanding existing low-income housing subsidies and programs for helping low-income people make rent.
  • Introducing more first-time homebuyer programs that lower the financial barrier to buying a home.
  • Restricting the expansion of companies like Airbnb that often close off rental units to local residents in favor of short-term vacation rentals.
  • Incentivizing local governments to build, maintain, preserve, and provide accessible affordable housing by offering federal funding or tax breaks for these and related services like public transit.
  • Limiting the damage an eviction can do to a renter’s ability to find housing.
  • Separating school funding from local property taxes to relieve some of the pressure homeowners feel to maintain home values.

Social solutions

Lest you think you were off the hook by not being a lawmaker, there’s a lot individuals and communities can do as well to support the affordable housing movement:

  • Show up to your local government meetings. When I was growing up these were called “town halls” and they were the best show for miles. When people start lobbying against affordable housing, stand up and voice your opinion in favor of affordable housing.
  • Donate to national, state, and local affordable housing NGOs. A few we recommend are Homes for All, Opportunity Starts At Home, and the National Housing Conference.
  • Talk to your people! When you hear someone complaining about how their home values are going down because of the multi-family dwelling on the block, tell them about the affordable housing crisis. Explain to your friends and neighbors the value of affordable housing and how stable housing for all of us will lead to a better world for all of us.
  • Fucking vote. We’ve been over this: if you don’t vote, you’re handing over your say in our democracy to someone who doesn’t agree with you on stuff you care about. Vote for representatives who support accessible affordable housing policies. Maybe Jimmy McMillan is still running for office somewhere!

Affordable housing isn’t just a problem—it’s our problem. You don’t get to opt out of caring just because you own a home or you can easily afford your rent. It affects our communities, our young’uns—and I believe the children are the future! So I’ll end on this quote from Matthew Desmond’s Evicted:

Housing is absolutely essential to human flourishing. Without stable shelter, it all falls apart.

Many thanks to the Plutus Foundation, who through their monthly Plutus Impact Series encouraged us to examine the topic of affordable housing. Not only are they endlessly inspiring and supportive of financial literacy, but they do good work! Plus, for reasons that baffle the greatest of minds, they think we’re cool, for which you’ll have to forgive them.

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19 thoughts to “The Rent Is Too Damn High: The Affordable Housing Crisis, Explained”

  1. Even more depressing is the purchase of (comparatively) affordable homes by rental companies. The all-cash purchases reduce the supply and, with fewer homes available, drive up both sale prices and rental costs. And many of the remaining homes are bought by flippers who, by making mostly cosmetic changes, raise the price exponentially. Take your basic HGTV show about flipping: what happens more often, new tile in the bathroom or installing new pipes in the entire house? Leaky roofs get half-heartedly patched, but entire lawns are replaced at the first sign of weeds. Viewers watch, but do they wonder what this really means?
    It seems like everyone is chasing the quick fix and kicking the can of bigger problems down the road. Now we’re dangling off the cliff at the edge of the road.

    1. Also in this whole market cluster-f*ck, flippers with existing teams of reno staff are the only ones that CAN do anything with “fixer uppers.” Good luck trying to hire a contractor if you’re a regular person trying to turn one of these shacks into a home.

      1. I have a story relevant to this. My (incredibly well meaning) parents bought a fixer upper and hired a few shady contractors and all I can say is BE INCREDIBLY PICKY ABOUT WHO YOU LET DEAL WITH HOME PROBLEMS. There were several problems, water damage being amount them and we had to move out. Not just anyone can deal with serious housing problems.

  2. Thanks for an excellent explainer on this topic! As someone who works in urban planning, this is important to me, and I would make one modification to your piece -“They’re primarily staffed and lobbied by the very same homeowners interested in increasing their homes’ values by keeping housing expensive.”

    I would say that most local planners are quite on board with permitting and building more housing, but residents and homeowners who oppose this housing for protecting their property values (aka NIMBYs) are the main problem. They show up to public meetings and fight online and are powerful local interests that tend to steamroll these local city staff. So, don’t be a NIMBY!

    More here:
    https://www.nytimes.com/2022/08/12/technology/nimby-housing-silicon-valley-atherton.html
    https://www.nytimes.com/2022/06/05/business/economy/california-housing-crisis-nimby.html

      1. But have you heard of the YIMBY movement? It gives me hope.

        I’m really proud to be working with the people updating the housing land use and zoning in my city – we recently removed many restrictions on ADUs and expanding options to build duplex, triplex and 4plex across the whole city IS NEXT!!

        Next to our house we were lucky with timing and access to cash to purchase the vacant lot and originally planned to build a garage there. But I realized that while building a garage and expanding our yard to include a fruit tree orchard would be nice, it wouldn’t serve the neighborhood as well as building a garage, with an apartment above AND another house on that lot. So our new plan is to add two additional housing units to the lot – although I haven’t totally counted out doing a duplex and an ADU although there are some unknowns as far as fire/health/safety requirements that this triggers going from two units to three.

        1. Yes! Lol, I just replied to Josh’s comment with my YIMBY experience. Wonderful group.
          And I love your thought process here. “What would best serve the neighborhood?” is a fantastic way of approaching land development. You should be hella proud of yourself!

      2. My favorite version of NIMBY is CAVE people – Citizens Against Virtually Everything.

        Or BANANAs – Build Absolutely Nothing Anywhere Near Anyone.

        Signed, your favorite FORMER city planner.

        1. I fucking LOVE this.
          There’s an activist group in my city I just discovered called YIMBY–Yes in my back yard. They’re all about alleviating homelessness and working on the affordable housing crisis. That’ll warm your little city planner heart!

    1. As a resident of Marin County CA, yes OMG NIMBY. I moved here last year and the drama about affordable housing on Nextdoor is sadly entertaining. A fourplex is evil let alone anything larger.

  3. At 37, I just bought my first home by myself and without any help from family. I was also living in a HCOL major city where rents were skyrocketing so much it was making the national news. I panicked and felt like I had this really small window where my savings rate for a down payment + interest rates + prices aligned. I dicked around in my HCOL city thinking I could have a choice about neighborhoods and ended up totally missing my window after 4 months of searching. Then I went to a smaller MidCOL city one state over and bought there. The market was beyond insane in this city but the overall prices were still lower than my previous city. I ended up buying my place for $360k but with interest rates going up the market cooled a little and now the estimate for my house is $340k after 2 months (2 years ago it sold for $200k and no improvements from then were made by the sellers). Half my paycheck goes to my mortgage too. And I had so much privilege helping me get to this point: growing up white lower middle class, being able to go to college, having a remote job so I could relocate easily. I don’t know that buying this house was the right answer but I also don’t think waiting and renting would have been either. My rent this year would have been $100 less than I pay for my mortgage and that was for a 1 bed with no w/d in an old building and a future of rent increases. It really feels like there are no good choices here and the system is very very broken.

  4. In California, the ADU rules have significantly changed, and I built one! I’m within a “transit zone” close to a train, so no new parking had to be added. Permits got cheaper! (labor got more expensive, so I learned more DIY). But one thing I’m doing is telling all the home owning friends about how having a small rental unit on your property isn’t…icky or weird or hugely disruptive….I think people are weirdly still super opposed to change within their own property line, and when properly planned these units can change lives without huge disruption. My friend is my renter, my ADU is part of my retirement plan so I don’t have to sell my house to get income back out of it. Now my house feels more permanently my home, I feel more part of a neighborhood, because I made my own mini neighborhood!

  5. I work in affordable housing, investing and lending to apartment developments financed with the federal Low Income Housing Tax Credit program. Increased constructions costs have been a problem for the ability to build more affordable apartment units for many years and has only been exacerbated in recent years by the pandemic. It’s very frustrating to feel like we will never meet the need (which is sadly also increasing). Side note, I’ve worked with people who you could describe as NIMBYs even though they daily see the data you highlighted in the post and it is SO FRUSTRATING.

  6. Sounds like you made a great buy, 2014!

    Love the ideas of requiring developers to set aside a certain percentage of units for affordable housing, as well as restricting AirBnB. I think this is already starting to happen in cities like Denver.

    Curious to how much the affordability crisis is compounded by items not mentioned, such as the influx of foreign buyers purchasing homes just as a place to park their money (not renting it out or living in it) as well as the issue of the labor shortage?

    We can vote to increase building more housing, but it seems there aren’t enough skilled laborers willing to work for the wages available, which further exacerbates affordability because that means the housing costs more to build.

  7. Wow–awesome to gain a half milly on your primary residence in eight short years. That’s the kind of market timing that only comes on accident (and the only way to effectively time the market is on accident). I’m SOL in my HCOL area in the Bay Area. Since a traditional house is pretty much out of the equation, I was just looking at 1,000 sq. foot condos for 600k+ and HOA fees of $700/month with $10k in property taxes. It’s a crime scene out there if I ever stop renting my rent-controlled place (with roommates) that I’ve lived in for a decade-plus.

    1. That’s INSANE. When I was researching this piece, the Bay Area kept coming up as an extreme example of the affordable housing problem. You’re not the only person I know living in a rent controlled apartment out there with the intention of holding onto it for dear life!

  8. Right on the nose, as always. Just spent an hour on the phone with my dad arguing about this. I wish there was a “clean” version of the article to send to him, lol!

    1. Hah! Feel free to copy and paste it into a word doc where you can bleep us to your heart’s content. Lord knows we’re incapable of censoring ourselves! And good luck with your dad…

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