Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.
This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get.
Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move).
That's average renter difficulty. It can get far worse.
In 2021, the few rentals available here got 400 applications/day. We beat out 50 applicants for one that was advertised for 2 hours (offered 6mos up front).
We beat long odds and barely avoided homelessness (even tho we had good employment history + money in the bank).
Many, many others were less lucky. Every rent-by-the-week hotel filled up, typically with people exhausting their savings.
Things are slowly moving in that direction, only because the pressure has been so high for so long. It almost boiled over during COVID in some neighborhoods. There are still works of "Abolish Rent" graffiti left over from that time.
Nobody is happy about it or thinks it's a good idea, but living further out is not perceived as a legitimate option because of the fear of being severed either socially or career-wise.
Whether that's a rational fear or not, it's a reality that allows housing prices to outpace wage gains every year. As somebody who used to think housing demand is fairly elastic: housing demand is much less elastic than you'd suspect.
The 60% of income on rented housing for people whose income would make them otherwise solidly middle class (to me, this definition includes ownership of real estate) is new.
Something else that's new: the prevalence of managing NYC properties through family trusts from a great distance while its members are domiciled and functionally unemployed in tax-shelter states. Hmm, I wonder if there's any explanatory power to that correlation?
Being housed is highly desirable and has sharply driven up the cost in places where people are housed.
We are running out of cheap places to live in. Remote work has mostly pushed the crisis to other places without a corresponding pressure release in the high COL areas.
Our rents in Florida have doubled for unique reasons. My loved ones in VA, DE, MD, KY, NC and MI are seeing rents over 50% higher for reasons unique to each area.
It kind of feels like a pattern.
We only just recently reached the level of new home starts we were hitting pre great-recession.
We have a decade's worth of supply deficit and in most locale's aren't doing much to overcome this.
Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic.
This is true. A decade ago this area was among the cheapest in the nation but now is solidly in the expensive category.
In between were moratorium on apartment construction (the last non-premium housing still being built) and a sudden influx of CA & NY sized dollars. The never-stopping, double digit, yearly insurance increases - that just levels it all up.