New research by both the Brookings Institute’s Metropolitan Policy Program and the National Low Income Housing Coalition tells us that the nation’s affordability crisis is beginning to metastasize and impact the middle class.

Research by the National Low Income Housing Coalition indicates that 8M renters pay +50% of their income for rent and that the nation as a whole is short some 7.2M housing units.

Jenny Schuetz, a housing policy fellow with the Brookings Institute, found that severe affordability issues are affecting both lower and middle class Americans. These issues or stress points are forcing both homeowners and renters to make “traditional trade-offs, sacrificing a combination of cost, commute time and home size for any proximity to big city job markets. Everyone everywhere, not just in California but in Cleveland, is having to spend more than they have in order to have a place to live.”

Three of the nation’s fastest growing cities, Charlotte NC, Salt Lake City and Columbus Ohio, (certainly not coastal cities) have become too expensive for more potential owners/renters than they already have. Charlotte is short some 34,000 affordable housing units as its booming job market has attracted 100,000 new households since 2000. Salt Lake City is currently short some 54,000 units at a time when it has been a leader in home building. Its housing costs are higher than both Phoenix and Las Vegas. And the Columbus housing market, now cooling slightly, has simply exhausted its too-many buyers with ever-higher home prices.

According to a report by the St. Louis Federal Reserve Bank, the median price of a single-family home outgrew increases in median household incomes by 390% between 1986 – 2017. The Center for American Progress has reported that the creeping cost of housing is pinching a middle class already struggling with flat wages, rising child-care costs and skyrocketing price tags for 4-year higher education.

Berkadia, a Berkshire Hathaway company, has reported that the lower-middle income bracket ($35,000-$49,999) has been hit hard with 6%-8% rent growth in the last seven years. Cities like Tulsa and Omaha are showing that more than 40% of their respective families are identifying as rent-burdened.

The causes of unaffordability, of course, are multiple…historically low levels of new construction, soaring land and material costs, labor shortages, restrictive regulations. The Kansas City Federal Reserve Bank indicates that during the last ten years of economic expansion, the annual rate of single-family home starts is -25% below 1990’s level of housing starts and that the current rate of construction relative to the number of households is at its lowest level since the 1950’s. The Lincoln Institute of Land Policy indicates that the cost of land has increased more than 76% from the year 2000. Big, productive and progressive cities are hampering housing supplies with deliberate, restrictive regulatory choices.

According to Schuetz, local governments have no incentive to change but without change, “…high housing costs (are)…fundamentally damaging…and hurting the vitality of our most productive regions.. Additionally…(high housing costs) are seeping into and damaging the lives of more and more individuals and families.”

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