Housing is now unaffordable for a record half of all U.S. renters | Hacker News Reader

Housing is now unaffordable for a record half of all U.S. renters

npr.org

61 pointsgeox57 comments

We don't build small starter homes anymore. 1-3 bedroom, 1-2 bath homes, single car garage. A small bungalow - the only ones you see were built in the 50s and 60s. You simply never see them in new construction. Actual small, modest affordable homes without expensive features or excessive size. I don't know why it is this way, but it's frustrating to observe this. You have to look in the old neighborhoods for these and sometimes they are bad areas, sometimes they are good. In the good areas a lot of these homes get torn down and replace with expensive homes 2-3x the size.

In America, we simply stopped building small affordable, HOA-free homes. Why?

- We still build some 800 - 1500 sq foot living spaces. They're called "condos" or apartments. We should be building a lot more of them, but we do still build some.

- Small bungalows should still be built in rural areas, but they're highly inappropriate in urban areas. The secondary costs of the car-dependent sprawl required by inexpensive single family homes is massive. They may have been built for $6,000 in the 50's but today likely cost the cities that house them more than $6,000 per year in infrastructure maintenance costs.

This is why we should be charging taxes based on some combination of land value/servicing cost (or just straight land value if we calculated that as if the land were maximally utilized for its given zoning and zoned everything appropriately densely).

We got too enamored with sticking it to rich people because they are rich and build opulent things rather than focusing on charging rich people for the things they do that negatively impact the rest of the city and that has very little to do with how opulent their mcmansion is and very much to do with the fact that it's sitting on a large lot, with large frontage that increases the cost of delivering all services to everyone.

If we did this the change would go something like this: That 50's era bungalow on a inner city lot would be zoned for a lot more units (4-10 depending on lot size and other considerations that might allow 4+ stories to be built) and it's taxes would go from say 3500 under the old system to 8000-12000 which would let them choose to live in low density and pay for it, or sell to a developer, develop themselves. At the same time the mcmansion would see a smaller change in their property taxes and may be slightly higher or lower depending on lot utilization, or may have an opportunity to subdivide and develop what was once the landscaped garden area into more density to lower their tax bill under what it was before.

There was some report published here a few years ago that I'm too lazy to look up that did it cost analysis of City infrastructure and found that cities make money in the highly dense impoverished areas and lose money in the Richer areas simply because of the cost of distance that roads, pipes, cops, etc have to travel down.

That, of course reminded me of the New Orleans shotgun and the reason for it: for a while, property taxes were based on linear frontage feet, directly proportional to the length of the road in front of the house, because that was its cost to the government according to the rational French...

Townhouses/rowhouses can also be a good middle ground.

We rented a townhouse for several years before buying our place. If one had gone up for sale while we were looking we would have stayed in that community. It was perfect for us, small community/neighborhood, and the house was just the right size. A two car garage would have been nice but we made it work.

We ended up in a house on the smaller end of what was available and we still think its probably too big for us (great neighborhood though).

Definitely, those and other forms of the "missing middle" that traditionally dominated cities.

But you don't really own a condo. I mean you do, but you still have to pay condo fees which in many cases are so high it might as well be rent.

I have a home exactly like that. Its market value is about $900K at the moment, so even if they were still being built, nobody can afford them.

Is that the value of the structure or the land it’s on ?

First of all, this is unrelated to the article which is discussing rent.

Second of all, we do build starter homes in the burbs. The problem is that a growing amount of those homes are bought by private equity to sit on and invest, partition and rent out or convert to Airbnb.

Third, these homes are simply just not as profitable to be built. So the incentives in our economy mean more luxurious homes which have a higher return.

NIMBYism, which is mostly driven by:

Homeowner Greed - if fast-rising home prices are making you richer & richer, then (per the classic supply vs. demand price curve) you only want a token number of very upscale homes to be built anywhere near your house.

Municipal Finances - when local government is mostly supported by property taxes, a $4M luxury house pays 40X the taxes that a $100K starter house does, and the cost of providing municipal services is not much different between the two...guess what?

"Wrong Sort" FUD - if lots of people are scared of (or bigoted against) anyone who's poorer than them, or has darker skin, or ... well, they'll for-sure find reasons to zealously oppose anything that might attract "those sorts" to the area around their homes.

These reasons are used mostly for dense projects like apartment blocks, not small homes.

There are, on the other hand, plenty of reasonable objections that arise from the nature of dense housing in certain areas, rather than from people's race/class/etc. Sometimes development projects really do destroy nice lower-middle to middle class communities (consisting of exactly the homes the parent is describing), that people have worked their whole lives to live in (one of the last remnants of the simple version of the American Dream).

Developers are no more rational/benevolent than governments, and therefore not everybody who has opposed any one development project is a villain who is racist/elitist/immoral in comparison to you.

So this isn't a US issue but is affecting most countries.

And it seems to be related to (a) people are living far longer, (b) they refuse to downsize or move into retirement homes and (c) young people are less willing to move into cheaper country/rural towns.

The hope was that technology and remote working would help but it really hasn't worked out that way. The only option is increasing density in urban areas and building taller apartment complexes.

(d) shrinking household sizes. Kids don't live with their parents as long, people aren't having kids and there are a lot more single households. sqft/person has increased significantly.

https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...

There’s an elephant in the room called inflation.

Is there another elephant sitting on it called real wage growth?

Yeah, I think it was eaten by inflation though.

Weird that the article quotes from 2022, then links to a study that is 2024 and shows that rent has plummeted. Here is the first line from the Harvard study:

"Rental markets are finally cooling as a decades-high volume of new supply has come online, outpacing demand. "

https://www.jchs.harvard.edu/sites/default/files/reports/fil...

Here's the second line of that study:

> Nevertheless, more renter households are cost burdened than ever before, and a record number of people are experiencing homelessness.

"Cooling" in such contexts means rising at a less rapid rate. It doesn't mean rent is suddenly affordable.

Supply is high. Affordability is not. Rents have not “plummeted” either, as evidenced by the document you linked.

This really is sad, but the nature of the problem has to be more complex than “there aren’t enough houses”. The US population has grown roughly linearly over the past ten years [0], but so has the number of housing units [1].

I suspect there are a couple of other major factors here, the first being “who owns the houses” - ie it’s not the number of aggregate housing units that matter, it’s the balance of how many rental units are available and the diversity of owners to ensure an efficient market.

But there’s also locality to consider - the housing market is a very local phenomenon and a lot of people aren’t able to simply move to where it’s cheaper (eg a single mother of 4 referenced in the story). But then again, I’m not actually sure that I would expect a single mother of four whose living comes from driving for Uber to be able to afford rent for that size family.. anywhere. So there’s a component of the quality of the low-end labor market here as well.

[0] https://usafacts.org/data/topics/people-society/population-a... [1] https://fred.stlouisfed.org/series/ETOTALUSQ176N

One of the biggest problems with the Canadian housing market is that people move to “where it’s cheaper”[0] in massive quantities. Sometimes they can afford it, but a lot of times they are moving on credit.

And then of course, if a big enough group of people moves to the same “affordable area”[0], supply drops below zero and there’s additional demand pressure caused by the people “at the back of the line” who are still chasing the idea and need housing.

It even got to the point where people started snapping up anything that had the possibility of being a “house hack” house or a multi-unit rental property.

[0] in many cases areas are only more affordable on paper. Less tax, more tax but lower food costs, cheaper rents, cheaper housing prices, etc. Not only do those change as the population and conditions change, but they are isolated parts of a local economy where many people still have a lower quality of life.

New housing units aren't necessarily created where people want to live/where the jobs are. There is a shortage of housing and very little new construction in every major city, for example.

Maybe its worth looking into land value tax again.

IMO: since this is not a problem for the ultra-wealthy who make policy decisions that set the direction of the economy, affordability will not improve. They have no real incentive to make things better for the 99.9% of the rest of us.

And people will (continue to) adapt, no matter how bad things get. Living with parents longer, finding roommates, cutting costs elsewhere.

Exactly! People who can actually solve these problems (including politicians) have no incentive to solve them. On the contrary they have more incentive to keep things as they are.

This is true up to the point where life becomes intolerable for the masses. Then the masses remove the masters. It feels as if elites think globalization has solved this problem, or competent AI might soon complete the process.

Wishful thinking. The masses don't "remove" someone who has a dozen or more ultra-mansions, yachts, and private jets, with wealth and assets all over the world.

Also, the masses usually end up in just as bad a pickle as before, if not worse. (Reference: most revolutions/uprisings.)

There is no such thing as a perfectly defensible system. Properties that large require workers to inhabit and maintain, and the more sophisticated the property, the more third party support required. The billionaire who imagines spending the apocalypse isolated away with their servants, should think about how quickly those servants would revolt, as soon as they're isolated from greater societal norms. Unless the rich want to give up the fruit of their success, the lesson holds: don't abuse those beneath you, because the position is arbitrary and incredibly susceptible to change.

This is a natural and desired [by current property owners] consequence of making it expensive or illegal to build new housing.

Missing from a lot of these conversations is a shared definition of what “affordable” means. I’m inclined to think that it is more difficult to afford housing than it was for my parents but couldn’t honestly say it is “unaffordable” because I don’t know what that means and it means different things to different people.

The article does offer a definition, though. The renters are "severely cost burdened," with insufficient room in their budget to cover rent and the rest of their bills, despite highly undesirable living conditions.

According to the report[1] they are referencing it means people spending >30% of their income on rent and utilities. This is up from around 40% in 2001 and is identical to 2010 but putting it that way wouldn't get any clicks.

[1]https://www.jchs.harvard.edu/sites/default/files/reports/fil...

In context, it almost certainly means "the specific renter's monthly rent payment is no more than 30% of their monthly income".

(NPR buried that definition in their "...in 2022, as rents spiked during the COVID-19 pandemic, a record half of U.S. renters paid more than 30% of their income for rent and utilities.")

Usually it is in relation to local median income.

Americans don't believe middle class can afford homes

https://news.ycombinator.com/item?id=39106074

So what happens if they all and at the same time, simply stop paying rent? Would I hear US banking collapsing in Europe?

Then property owners will not be able to pay their mortgage and be foreclosed on. The only ones winning are the big banks.

Banks don't necessarily win with foreclosure. Not sure how leveraged the typical landlord is, but a series of foreclosures would suppress housing prices with a glut of inventory, reducing the recapture.

People trying to be 'independent' only to return back to their parents house. American peer pressure.

Private equity and consolidation continues to be a thorn in your average renters side. There's no 'competition' (or what little there was before) when all apartments are owned by the same groups.

There's nothing more that I'd love than to never rent from Greystar again but they cover so much of the market it's impossible.

If NIMBYism prevents the construction of all but a token number of luxury apartments, and there are lots of 99-percenters who need a place to live, then you really don't need any Wall Street crap for rents to climb ever upward.

NIMBYism is an issue, but I've seen enough to conclude that I firmly believe the core problem is private equity and the way they unify rent across their property.

For example: The area I last lived in (Austin outskirts) my apartment wasn't anything special, there were new units popping up around me and it was fairly far from anything major. When I left in late 2022, they tried to give me a renewal offer that was a 40% increase in rent.

Most of the apartments around me were Greystar and of course, they all went up at the same rate and time.

Wall Street can do that kinda crap, and certainly needs some real anti-trust enforcement - but there's nothing like a "good" (for renters) vacancy rate to discourage any & every sort of rent increase.

The boomers are entering the biggest year of retirement. More then ever have put their retirement funds into 'safe' or 'low risk' which means bonds, which means money should be negative rates right now. Which we have seen on the worse off WW2 countries like germany and japan.

https://www.theguardian.com/business/2019/nov/22/germanys-ri...

https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-lays-groun...

Yet here we are with high rates.

https://tradingeconomics.com/united-states/central-bank-bala...

The USA printed a ton of money. Set that graph to max. The rate they are paying that down, there's no chance of success.

With rates high, that means landlords have to charge more. If there's a group of landlords who must charge more, everyone else can as well and they will. Afterall inflation is high, cost of living is higher. They have to charge more.

Now consider who is paying the inflation tax.

If your debt is secured at a fixed low rate. You're laughing. At current rates I'm earning $30,000/year.

If you don't hold any cash or cash-likes. You're laughing.

But if you're the person who has a bond which matures with 2% rate and inflation is 5%. You're literally giving the government free money.

If you're a retiree who is legally obligated through your fund to invest in ways that are 'safe'. The government is getting a huge paycheque from you.

If housing is unaffordable, who is renting and buying all the houses?

Read the article. They describe people as "severely cost burdened", meaning they pay the rent, but have very little left over for the rest of their bills. They also highlighted people that are beginning to share rent costs with others.

I totally believe it. My rent has stayed more or less the same throughout the pandemic, but food costs basically doubled, even tho I only buy groceries and eat at home. If I wasn’t in software I’d be severely limited in my options.

> It finds that in 2022, as rents spiked during the COVID-19 pandemic, a record half of U.S. renters paid more than 30% of their income for rent and utilities. Nearly half of those people were severely cost-burdened, paying more than 50% of their income.

Unaffordable here is based on a specific definition. They consider it unaffordable for more than 30% of your income to go towards housing, it doesn't mean that you can't afford rent at all.

Sometimes I get more confused by reading the comments here. What was the parent even responding to?

Just the headline, trying to get a quick snarky comment in early I assume

>who is renting

The renters. What else are you gonna do, be homeless?

>and buying all the houses

The money bags bigger than yours. You're not competing just with other people for housing but with investors, and if they have more money than you, then they win.

Those who can afford and those who rent/buy what they can out of necessity, but are extremely economically hampered as a result with a significant reduction in quality of life.

The other 50%

No, the renters are still renting by definition.

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