'It's the housing, stupid' -- finally, this issue gets election attention

But not enough

We don’t realize how painful this chart is (Zillow)

To paraphrase a long-ago election campaign slogan, "It's the housing, stupid."

America's housing market is desperately out of whack. How out of whack? Nearly one in 10 homes in America are now -- on paper, anyway -- worth $1 million. Congrats, all you millionaires!  To rob from rock band Barenaked Ladies, "If I had a million dollars / I *maybe* would buy you a house?"

How did this happen? The U.S. is missing somewhere between 4 million and 7 million homes (see below), depending on how you count. It's a problem that is decades in the making, and it's going to take decades to fix.  But our leaders have been painfully slow to notice it. How slow? The recent set of painful interest rate hikes was designed in part to "burst" the housing "bubble" by making mortgages harder to afford.  Cutting down on demand, as old-fashioned economists would say it. Well, when there's 100 people trying to buy every home, getting two or three to cry "uncle" by raising interest rates isn't going to lower the price, and it astonishes me anyone thought that would work.

I spoke with someone familiar with the construction of middle-class neighborhoods in Texas recently. She told me that the developer, who believes he can sell homes at middle-class prices and still make a decent profit,  simply sees bidding wars the moment the homes are placed up for sale. Even a builder who wants to sell a $250,000 home sees that place flipped for 50 percent more within a few months. That's how broken the housing market is.

How slow have we been to recognize the problem? The New York Times recently published an excellent piece about overheated housing markets even in small places like Kalamazoo, Michigan.  Excellent, but years behind.  The writer notes that even Boise, Idaho has become one of the nation's hottest markets, thanks to Covid's work-from-home boom.  Well, when I wrote about Boise's overheated market in 2018, long before we'd ever heard of Covid, and when telecommuting was still a dirty word ...I was late to the party. Everyone in Seattle knew that Boise had already jumped the shark back then.

I've been writing about the mismatch between homes and families for a decade as part of my Restless Project series, pulling my hair out with each half-measure and "affordable housing" project designed to add a few dozen rental units here and there. I'm thrilled that both major presidential candidates are talking about this now, and have discussed proposals to add millions of new homes to the housing supply. Both proposals have merit, but both are very late, extremely short on details, and years away from making a real difference to house-hunting families. But it's a start. Don't let them drift off topic to frivolous bickering about personality traits.  It's the housing, stupid.

I've long believed that many Americans have a vague but persistent feeling that they are getting screwed; they just aren't quite sure who to blame. So they rage, which is what one does with anger they can't focus. The encroaching nastiness of daily life -- all the sniping and road rage and disgusting Internet comments -- is a symptom, not a cause.  When I wrote Gotcha Capitalism 15 years ago, I was certain that life's little ripoffs, designed by supercomputers engineered to cheat consumers systematically, played a big role in that. I still think that's true, but I now believe the near-death of America's social contract -- work hard, and you'll have a nice place to live near good schools -- causes much of the angst and anger.

Sure, people do buy those million-dollar homes, thanks to some toxic combination of high debt, overworked parents, and miserable jobs that pay only when you've mastered the art of screwing other human beings for corporate glory.  Even so, many who own those million-dollar homes live frenetic, anxious, house-poor lives.  Some 40 million American families are housing poor -- they spend more than a third of their income on housing -- and in some cities, half of income is the norm.

Back when I started covering America's drastic housing shortage, these grim data points were largely limited to large coastal cities like New York and Seattle.  Families willing to relocate to "second tier" cities still had a chance at a decent life. But today, as I explained recently, Montana might as well be Manhattan at this point.

America's housing crisis is boiling over; I'm glad to see both presidential candidates are talking about this.  Talk isn't going to help any family find a home near good jobs and good schools, however. This is a structural problem that requires generation-sized solutions. Fixing it would require construction of several million new housing units -- think 3 million homes dropping from the sky -- along with all the secondary considerations, like new schools, new roads, new sewers and so on. Sadly, good ideas like making federal land available to developers for quick-start housing projects face gigantic hurdles when it comes to all these secondary issues.

No matter. We must start today.  It's the housing, stupid. In fact, it's the supply stupid. When we finally get our housing market un-stuck, I think you'll see a lot of America's other issues will be easier to fix.

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NOTES:

Zillow published a simple study recently suggesting America is short of about 4 million homes.  From the study:

"For each of the 3.7 million housing units available for rent or sale across the country in 2021, there were more than two potential households — families likely in need of their own homes. This means even if every missing household was willing and able to move into their own home, 4.3 million households would have been left without a place to move to."

Meanwhile, Annie Lowrey at The Atlantic wrote a far more thorough piece about America's housing shortage in 2022 that concluded that we are about 7 million units short.  And that was...two years ago. Her piece is well worth the read.

Here is Newsweek's analysis of both the Trump and Harris housing market proposals.  Here's a slightly different take from GZeroMedia.  And here is the NY Times. My summary: As any real estate agent will tell you, all housing is local, so any real solutions start there.  Incentives to make local planning boards easier to deal with are one potentially useful tool.  Both plans mention use of federal lands, which has potential.  Harris' plan to give $25,000 to first-time homebuyers is fraught with risk; it would likely just raise prices. Trump's idea that mass deportation is equally impractical as a housing market solution.