The American Dream is at risk because homeownership – the primary method for wealth accumulation in the country – is simply out of reach for millions of Americans. And it’s a crisis of our own making by making it increasingly challenging to build new homes.
The supply shortage is years in the making and is mainly the result of a welter of zoning restrictions in many populous communities and rising construction costs. Estimates show the country has a shortage of housing between 3.8 to 4.9 million units.
The lack of supply has created intense competition in the real estate market, where prospective buyers vie against one another against a dwindling number of available homes – which has caused housing prices to accelerate across the country well above the rate of inflation.
High inflation has caused mortgage rates to jump, further increasing the cost of home ownership, and the average interest rate for a 30 year mortgage is nearly seven percent, close to a high-water mark for the 21st century. The housing shortage has also resulted in higher rents as well, and an increasing number of households--nearly forty million at last count--are considered cost-burdened by housing economists, which means that they spend over thirty percent of their income on rent or mortgage payments and likely have difficulty paying for everyday essentials.
However, some policymakers have begun to work to ameliorate the housing shortage. For instance, the Housing Supply Frameworks Act is a bipartisan piece of legislation that directs HUD to develop a framework establishing best practices for zoning and land-use policies and provides resources to state and local governments to overcome barriers to housing development and construction.
Representative Mike Flood (R-NE), one of the bill’s cosponsors, noted that “the rising cost of housing is putting the American Dream out of reach for working families across our country. We need an all-of-the-above approach to addressing America’s housing crisis.”
The Trump administration has also formed a joint task force to explore how to develop affordable housing on federal lands. Housing and Urban Development (HUD) Secretary Scott Turner and Department of the Interior Secretary Doug Burgum will work with state and local officials to take inventory of underused federal properties and transfer or lease them to states or localities to address housing needs if possible. The Administration has also directed HUD to take steps to support the infrastructure required to make development viable.
The private sector — including ALTA and its members — has also been busy developing initiatives that break down barriers to homeownership for more American households and underserved communities.
From Memphis to Columbus to Philadelphia, the CONVERGENCE Collaborative utilizes cross-sector partnerships with local and national partners from the private, public, and non-profit sectors to bridge four gaps that create barriers to homeownership: Information Gap, Trust Gap, Market Gap, and Resource Gap.
In Memphis, local stakeholders are providing information on affordable homes, financial education courses, and other resources designed to increase opportunities for more people to get into a home—and keep it.
In Columbus, the partnership developed and operates Bloom614.org, a public website that helps guide communities through every step of the homeownership journey.
Philadelphia has launched targeted initiatives geared towards fostering opportunity in the housing industry and introduced an innovative Downpayment Assistance (DPA) Matching Tool, which matches potential buyers in the city with available DPA programs and loan products that start them on the path to homeownership.
These are all promising steps and a sign that real change is coming. However, real progress will require continued collaboration - policymakers must prioritize reform and roll back excessive regulations and restrictive zoning laws while industry leaders commit to responsible, efficient development. Affordable housing is too important to allow the status quo to continue indefinitely.
