Harvard Business Review - The Market Alone Can’t Fix the U.S. Housing Crisis
Legal director Sandeep Vaheesan and chief economist Brian Callaci have co-written an article on the impact that unaffordable housing is having on regional and national economics, specifically high living cost areas, and what to do to fix the problem.
The United States is experiencing a serious housing crisis, and has been for a long time. Growth in rents continues to exceed overall price inflation. Mortgage rates have been at a multi-decade high due to the Federal Reserve’s aggressive rate hikes since summer 2022. Tens of millions of households spend more than 30% of their income on housing. Shelter is a basic human need and unaffordable housing is — and should be — a national scandal.
It is also an increasingly urgent concern for businesses. Unaffordable housing is a drag on regional and national economies. In areas where housing costs are high, employers end up effectively transferring significant sums to landlords as the cost of attracting talent. High rents and mortgage payments make hiring harder at all levels: Recent research has documented that high housing costs have eroded the urban wage premium for workers with fewer years of formal education. Now, these workers are better off moving to a city with lower cost of living rather than one that offers a higher wages.
In August, Vice President Kamala Harris announced that housing was one of the core features of her economic platform, a position she echoed in the September presidential debate. In a speech laying out her plan — the first major policy announcement of her candidacy for president — she introduced a goal of building 3 million new housing units, using tax credits to promote construction, to address the supply problem that has contributed to higher prices. But she also voiced support for policies that would ban setting rents with algorithmic pricing systems and introduce new regulations for corporate landlords. This follows the Biden-Harris administration’s plan to cap annual rent increases for large landlords at 5% over the next two years.
Read full article here.