The US has been battling the property crisis for years, and it is coming to a head.
According to the report by the US President’s Council of Economic Advisers, there is currently a shortfall of 10 million homes in the US. One of the main causes is the growing disparity between income and expenditure on rent or housing costs. Almost half of the country’s tenants spend more than 30 per cent of their income on housing. More than a quarter of American households who rent spend more than half their income on housing, and recent surveys show that most Americans consider housing costs to be too high.
The difficult situation in the housing market is also reflected in the eviction figures. The number of evictions is rising steadily, leading to an increase in homelessness. A distinctive feature in the US is that the reasons for eviction vary according to tenants’ ethnic background. Whilst only 7% of white tenants fail to pay rent, the corresponding figures for Black and Latin American tenants are 19.5% and 14.5% respectively.
The housing crisis not only poses a growing threat of homelessness but also contributes to the impoverishment of society. When property prices rise (relative to income), people have less money left over for other goods and services. As a result, some citizens will never be able to buy their own home. For this reason, some young people are forced to return to their parents’ home or never leave it at all, preventing them from starting an independent life and raising a family.
The shortage of affordable housing is causing a decline in economic productivity. Employees find it difficult to live in metropolitan areas where demand for skilled workers is rising or where well-paid jobs are being created. High property prices are also having a negative impact on fertility – many couples are postponing the decision to have children.
The report also points out that the climate policy decisions taken by former US President Joe Biden have contributed to higher costs for house building. These relate to energy-efficient building regulations that imposed an obligation to install more efficient air-conditioning systems and water heaters in buildings. The document cites a 2021 analysis by the National Association of Home Builders, which concludes that the installation of environmentally friendly appliances can increase the price of a house by 31 thousand dollars. It can take up to 90 years to recoup the costs associated with purchasing these solutions.
Added to this are the American bureaucracy, which is in a state of disarray, and restrictions on land-use planning that prevent the construction of denser housing. The consequences? The most difficult situation is in California (where 187,000 people are living without a roof over their heads) and in the State of New York (with 158,000 homeless people).
Welcome to America, the land of opportunity.
