Over 38 million American households can’t afford their housing, an increase of 146 percent in the past 16 years, according to a recent Harvard housing report.
Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered “cost burdened” and will have difficulty affording basic necessities like food, clothing, transportation and medical care.
But the number of Americans struggling with their housing costs has risen from almost 16 million in 2001 to 38 million in 2015, according to the Census data crunched in the report. That’s more than double.
And despite the overall economic recovery, it’s only a small improvement from 2014, going down by about 900,000 households.
When people can’t safely afford to pay their mortgages and rent, it isn’t just a problem for those with a lower income or people who bit off more house than they can chew.
Economic Trickledown
Housing unaffordability also drags down GDP, slowing down overall economic growth for everyone, said Dan McCue, senior research associate at the Joint Center for Housing Studies at Harvard University, which publishes the annual State of the Nation’s Housing report.
“It forces them to constrict spending on other items, which would reduce spending on other parts of the economy. They would buy less, save less, reduce savings,” said McCue.
“It may make it more difficult to venture out and start a new company — or, living month to month, they’re much less likely to go back to school and get additional training; and may not be in the job that makes them the most productive member of the labor market,” McCue told NBC News.
A big factor has been how wages haven’t kept pace with rising housing costs.
“For lower income groups, it’s even worse than stagnation. It’s not keeping up with inflation,” said McCue.
A Lack of Affordable Housing
Housing costs are being driven by a limited supply of move-in quality, entry-level housing, said Diane Swonk, CEO of DS Economics.
“In the wake of the financial crisis, so much capacity was taken offline,” Swonk told NBC News. “Much of the existing stock of housing is still underwater. Many of the entry level houses are in disrepair.”
And what building is happening is happening upmarket.
“Builders are less able to downscale and build smaller volumes of smaller homes,” said Swonk. “It’s restricting supply well below demand, so of course it shows up in price.”
Also factoring in is a net decline in migration from Mexico after 2009 that decreased the number of skilled construction workers, and an increase in material costs
Unfortunately, I will never will be able to own a home, nor do I really wish to. Those days are long gone. Growing up with my family, I enjoyed living in beautiful homes, those days are gone forever I’m afraid. Even though I work my ass off and enjoy big paychecks, home ownership is only a dream.
I’ll be lucky if I can save enough for a sweet fifth wheel, living in a sweet trailer park. I’m lucky as hell to now to live in a state of the art semi with all the comforts while showering in truck stops, eating out every day, and praying I don’t get killed by some maniac out here on the road.
HOME OWNERSHIP? Forgettaboutit.
Even owning a car is outta the question. I rent when needed. Even my wardrobe sucks.
It’s win the lottery, marry somebody with lots a cash (which is really a pain in the ass) or find a bag of cash laying in the street.
To be quite honest, I’ve been around big money, it’s nothing but a big time pain. Just give me shelter and a good job, I’m happy.
There’s something to be said for having mobility and a small footprint. Being able to get by and be happy without a lot of possessions is a very valuable quality.
Personally, the only expensive things I spend money on are weapons-related. I insist on owning only high-quality, thoroughly vetted and tested weapons (e.g., Colt ARs, HK handguns), but practice ammo actually accounts for the lion’s share of my firepower budget. I’ll also spend a little more for healthy food as opposed to processed crap. Otherwise, it’s cheap housing, cheap clothing, cheap everything, and I don’t feel deprived at all.
I really don’t either. I’ve had all the toys, boats, fast cars, motorhomes, fifth wheesls,motorcycles.
At 57, 58 in January all I want now is a roof, occasional martini, a good pair of shoes and my health.
I can rent everything else.
Toys mean nothing anymore.
Back when my parents were young, one week’s pay covered the rent or mortgage. Now, most people can’t make it even one month with all four week’s pay! 30%?!? Only the 1% can afford such luxury.
Since a (well-known nefarious) prop’ management company took over my little cottage(s) about 6 years ago, they’ve raised my rent about 60% – 25% over the last 13 months alone.
The sad part is is that it’s STILL the only thing around at this kind of price, even though it now consumes about 70% of my income with the economy grinding to a halt, AND my doctor-caused heart condition.
Meanwhile, the owner of the prop mgnt company drives 3 vehicles; A Caddy Escalade for ‘everyday’, a Z8 BMW ($170,000), and was boasting at the surf shop he just paid cash for a $250,000 race car.
Holy crap, that’s nuts. I’d blow that joint if at all possible.
If you’re not tied to that area because of a job situation or other commitment, you might want to consider living in another part of the country. You probably already know this, but housing and rental prices in “flyover country” are FAR lower than they are near the coasts.
I’ve been paying for this house for over twenty years, essentially paying for it multiple times, yet, through a Chapter 13 bankruptcy agreement, I get to pay 50% more per month for 5 years, full contract through 2055. I had to sign a contract that extends past my expectation of life, if I want to stay in a house I’ve paid for many times over.
And like nbc news states, the economy is in full recovery, so this type of situation is not the norm.
I know plenty of people who are wedged between a mortgage they can no longer afford and rents that exceed their current unaffordable mortgage.
Make do with what you have. Reduce, forfeit, downsize. Get yourself a tiny home. It’s all the rage.
BULLSHIT!!
Babyboomers such as myself are the first generation in a very long time to go backwards, economically speaking from our parent’s status. This is no accident. The status quo must stop degrading or I’m gonna die early. Got no choice in the matter.
“a net decline in migration from Mexico after 2009 that decreased the number of skilled construction workers”. That statement is the biggest load of camel manure I have ever heard. I was a contractor in Houston for 20 years and scraped by because every beaner in town would under cut the prices and build substandard homes. Skilled labor my asstrolobe! But most of the white construction workers were no better. (which is why I built homes from the ground up by myself) It seems that there has been a vast degrading of skills across the US.
Sad commentary of the work ethic out there that you’ve seen first hand.
Our friend JD is also a master framer and specialized carpenter. I’ve seen his work. I gotta tell you FarmerDave, you guys are highly skilled, you out to see what Henry’s son does with a computerized milling machine!
Friggen unbeelievable
“Ought. Spelling
We all should get together some day and have some beers. I’m sure the conversations would be fascinating.