Enough With the Housing Crisis Already!
There is no excuse for a wealthy society like ours to have any problem providing enough housing for everyone. The housing crisis is an intolerable and glaring policy failure, and we are approaching a critical mass of collective exasperation.
A biker passes apartment buildings in Brooklyn, New York, on July 17, 2024. (Yuki Iwamura / Bloomberg via Getty Images)
Housing crises persist in the United States and Canada. Most of us have experienced housing stress or know someone who has, and we’re all sick to death of it. While politicians often claim to be addressing the issue, high prices for owners and renters persist and people continue to struggle to afford shelter. In many European capitals, the average rent for a one-bedroom apartment is more than the median income of a young person. In 2023, houses in the UK were more expensive than they’d been since 1876. In the United States, home prices are up 60 percent over the last decade. Needless to say, wages have not followed suit.
As housing affordability declines, so too does idea that one could someday, somehow, move from being a renter to an owner. Last month, the average selling price for a home in Canada was CA$699,117 — a decline of 4.1 percent over last year, but still way too much for too many. The average price in the United States is also down, but still sits at $420,800, with mortgage rates hovering around 7 percent for a thirty-year fixed rate.
Rental news isn’t better. The average one bedroom in Canada was going for CA$2,185 last month — $2,274 in Vancouver and $2,444 in Toronto. In the United States, the price tag is a bit more reasonable at US$1,534, for a whopping 699 square feet, although that number obscures extortionate markets like California at $2,117 and New York, where the average rises to $2,569.
Plummeting Livability Indexes
Last year, writing in Maclean’s, Michelle Cyca documented the end of home ownership and summarized the problem as well as anyone has: “There is too little housing, far too little affordable housing and far too many investors bidding houses up and out of reach, creating a rapidly widening divide between Canada’s housing haves and have-nots.”
She also highlighted the class dynamics at play, noting, “Those fortunate enough to already own property have watched their net worth soar along with the value of their homes, even as millions of others have been shut out.”
The rise of unaffordable, out-of-reach shelter has day-to-day effects on people’s lives. High prices lead to budget stretching, stress, and anxiety. It constrains economic activity beyond housing and ratchets up homelessness.
In Vancouver, the city’s infamous and persistent housing crisis has driven down its livability score, which so many of the city’s comfortable power brokers love to tout as a measure of the coastal paradise’s global supremacy. Outside Vancouver’s precincts, in British Columbia at large, 36 percent are considering a move outside the province to find cheaper housing, while in Ontario, four in ten of the province’s residents are considering the same. Countrywide, 40 percent of recent immigrants are thinking about leaving their province of residence or the country over housing costs.
The cost of housing is not just financial — it is also an emotional burden. It creates a sense of hopelessness and the belief that the “dream” of homeownership, drummed into so many of us since birth — the white picket fence, the lawn, or whatever it might be — is a broken promise and a betrayal of the social contract.
Whether or not you aspire to homeownership — whether you buy the construction of the middle-class dream or not — there are millions who do who are being structurally shut out from what they think of as a birthright. And in the process, consequently, they’re left wondering where to live and how to live. This collective dispossession is not doing anything to improve the political fractiousness of the moment.
Shares in Collective Dispossession
The way things are going, the only homeownership buy-in that the middle class will enjoy, short of access to the bank of mom and dad or lottery wins, will be shares in a real estate investment trust (REIT). This emergent dynamic creates a class of propertied owners akin to a new gentry, leaving others hoping their rent won’t skyrocket.
A future of REIT shareholders might seem like a joke, but it lays bare a monstrous symmetry: the very forces that have helped make housing brutally unaffordable — decades of unchecked financialization — will be the only game in town for prospective homeowners. REIT investors will be profiting off the same system that exploited them, serving its ends and hoping it might provide some cushion in place of the secure landing once occupied by defined-benefit pensions.
More US households are renting now than at any time since the 1960s. Nevertheless, owning a home outright is still widely perceived to be the sensible option. For the middle class, this partially stems from the desire to make good on the promise of homeownership — a desire made all the more acute by the destruction of pensions and the need to plan for retirement. However, the desire is also fueled by insane rental costs, as owning a home is thought to be a way to escape the viciousness of the home-rental hamster wheel. For the huge swaths of people who no longer believe they’ll ever be able to buy, the white-knuckle ride of renting feels like a permanent nightmare.
The crisis of housing affordability took years to emerge, and it’ll take years to solve. And there’s no single solution to the problem, which irks politicians and policy types who’d like to sell you on this “one weird trick” to make the problem vanish overnight. Housing expert Carolyn Whitzman once pointed out to me that it will take years of rising incomes and stable prices to really make a difference. Shortcuts run the risk of tanking existing equity and the fortunes of those who rely on their biggest asset to make it to and through retirement.
Whitzman was also quick and careful to point out that nonmarket housing is an essential part of any answer to the problem. In the United States, the idea of a green social housing development authority provides some hope for tackling two problems at once: housing and climate change. In Vienna, Austria, rents are much lower than similar cities in Europe thanks to its 220,000 socialized housing units.
All Hands on Deck
The Vienna case is proof of concept that socialized housing works to provide affordable, high-quality places to live. It follows that scaling up that model would mean more people have affordable, high-quality places to live. Ending the financialization of housing, which has contributed to the crisis, would go hand-in-hand with this approach.
In the short term, new market housing is, alas, a component part of meeting housing needs for the foreseeable future. That’s a statement of fact. New Zealand is liberalizing planning rules to “flood the market” with land and less burdensome building rules, which the government hopes will drive down costs. Experts have long recognized that NIMBYism and city planning restrictions are a drag on supply, which must rise by hook or by crook.
But upzoning and opening land for development won’t be enough. The market on its own cannot and will not solve the housing crisis. Socialized and public housing — which Canada used to build — are utterly essential and nonnegotiable elements of government housing policy from the local to the national level. Canada’s Liberal government knows it. In June, they committed $1.5 billion to build co-op housing, two years after promising to do so. That’s good news. The country needs much more of the same.
Restoring, preserving, and building accessible housing will take years. To ensure that people have housing adequate to human flourishing will require multiple solutions. There’s no single answer to the question of where people will live — the problem is painfully acute, and the vision of universal socialized housing remains distant. Alongside immediate needs for nonmarket housing, there is a pressing need to reform building regulations and improve land access.
We are approaching a critical mass of collective exasperation with the housing issue. Outrage over the crisis is resulting in a raft of policy answers and proposals. But lasting solutions will only materialize when we recognize housing as an essential human need and fight for it accordingly.