Why is the US in a housing crisis, and what can be done about it?

In the United States, 1 in 4 renters spends over half their income on rent, and millions of potential homebuyers can’t find a home within their price range, according to Harvard University’s Joint Center for Housing Studies. Put simply, there are far more people trying to find housing than there are places to buy or rent, pushing prices beyond what many can afford.

It’s striking how universal the issue has become for renters, says Alexander Hermann, senior research associate at the center. Zillow estimates that 4.5 million fewer homes are available than the number of Americans likely to be looking to either rent or buy.

Rents are “increasing for households of every race and ethnicity,” he says. “They’re increasing for households who are employed. They’re increasing for households at every age. It’s not just any one group that’s experiencing greater affordability challenges. It’s basically everyone on the renters’ side.”

Here’s a look at how we got here.

What is affordable housing?

“Affordable housing” is a technical term used by policymakers and statisticians, as well as a harder-to-define social phenomenon. They both reflect the idea that people should not spend more than a certain proportion of their income on rent or mortgage.

The federal government defines affordable housing as costing the renter 30% or less of their income. It uses a measure called Area Median Income – the midpoint of the distribution of household incomes of a certain place. It’s used by entities from local agencies to the U.S. Department of Housing and Urban Development. For example, HUD offers Section 8 vouchers – which help people afford housing in the private market – for those who make 80%, 50%, and 30% of the median income figure where they live.

The supply shortage is worst in big cities, particularly on the coasts. But in recent years, owning a home, or even finding a good rental, has begun to feel out of reach for more and more people.

When Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, first became a housing advocate in Cambridge in 2012, he found the conversation limited to places like Boston, New York, and Washington. Now, he says, a family living on minimum wage can’t afford to live in most places, which has spurred advocacy.

“It is a national movement in a way that it wasn’t when I started doing this work,” he says.

Why are we experiencing a housing crisis right now?

More people are struggling to pay for housing because of the 2008 financial crisis and inflation brought on by the pandemic, according to Mr. Hermann.

From the 1970s until the early 2000s, housing stock grew faster than households, creating a healthy buffer, he says. Poor-quality housing stock was demolished, and some units remained vacant, allowing people to move where they wished, while prices remained reasonable for those not at the lowest end of the income spectrum.

The 2008 financial crisis hollowed out the construction industry. Production lagged, only keeping pace with population growth. The healthy buffer disappeared. Inflation and interest rates grew during the pandemic, further depressing housing production, and supply chain disruptions drove up the cost of building materials.

More people were trying to move into new homes, as young people sought to leave their parents’ houses or live without roommates. Millennials, born between 1981 and 1996, hit peak homebuying age as pandemic restrictions were being lifted, Mr. Hermann says.

Multifamily and single-family production has picked up in the last year, he says, helping to cool the rental market. Still, high costs of construction and land, as well as other barriers, remain.

How did our legal system help create this crisis?

Local governments create rules – called land-use regulations or zoning ordinances – that define what can be built. Most residential zoning in the U.S. allows single-family homes only, according to a 2019 report in The New York Times. Often, governments require those homes be placed on lots that are a minimum of a half-acre to 2 acres.

That limits space for denser structures like duplexes or triplexes, or accessory dwelling units next to an existing home. Parking requirements as well as lengthy and uncertain review processes make projects riskier and more costly, explains Mr. Hermann.

And by definition, single-family zoning produces “a more expensive housing unit than multifamily,” says Timothy Hollister, a lawyer who has represented affordable housing developers in Connecticut for over 40 years.

In most places, a developer hoping to build anything larger than single-family homes – for example, an apartment building – must face a public meeting. In the book “Neighborhood Defenders,” Boston University political scientists found that, in Massachusetts, people at those meetings were more likely to be male, older, white homeowners, and most opposed the project.

Mr. Hollister says towns are “creating walls against perceived racial and economic integration that they did not want. The opposition to affordable housing is still very much based on stereotypes and prejudice and misperceptions and myths.”

The Joint Harvard Center for Housing Studies found, between 2015 and 2019, that 71.7% of white households owned their own homes compared with 41.7% of Black households. People of color are also more likely to need rental assistance, with 20% of Black and 18% of Indigenous households qualifying as extremely low-income renters compared with 6% of white households.

He says the Federal Fair Housing Act outlawed the most overt forms of discrimination. He traces the current crisis to the 1922 Standard State Zoning Enabling Act, which gave local governments the power to create zoning laws.

What can be done?

While economic issues – high construction costs, expensive land – pose challenges, Mr. Hermann says zoning and regulations are “in some ways more concerning because we have the most control over them.”

In her new book of essays, “On the Housing Crisis,” Atlantic magazine writer Jerusalem Demsas argues land-use regulation should be in the hands of state governments, not of local institutions. The entities “charged with land-use decisions are attuned to parochial complaints, not large-scale needs,” she writes.

With homeowners most likely to show up to local meetings, the voices most likely to support more housing – whether local renters or people who want to move from elsewhere – are just not present. She says state governments are beholden to a much larger set of voters, and are more likely to spur housing production.

Mr. Kanson-Benanav’s organization, Abundant Housing, is a founding member of the Welcoming Neighbors Network, which includes 38 pro-housing organizations across 24 states. He says they will be approaching their state legislatures and city halls next year in a concerted push for zoning and other production reforms. Already, a few states have begun to take control from municipalities, including Washington, Oregon, California, Utah, Montana, Massachusetts, and Connecticut.

Mr. Kanson-Benanav pointed to Gov. Greg Gianforte of Montana, who recently pushed through a law requiring municipalities to choose from a set of reforms aimed at spurring development, according to a news release. California took a similar approach starting in 2017. The Brookings Institution found, while not much yet has changed in California, a greater proportion of multifamily dwellings – and other housing suitable for people of middle incomes – were permitted between 2019 and 2022 than before.

Massachusetts’ 2021 MBTA Communities Act required towns and cities connected to Boston by train to submit plans allowing denser zoning near those transit hubs. Mr. Kanson-Benanav says it is only one part of a broader “tool kit” that includes allowing accessory dwelling units, lowering minimum lot sizes, and reducing parking requirements.

As a more immediate solution, the Harvard center suggests a $25,000 down payment assistance loan could smooth the way for 1.1 million Black or Hispanic renters to become homeowners.

President-elect Donald Trump says more restrictive immigration laws, and mass deportation of unauthorized immigrants, would ease housing demand. Project 2025, The Heritage Foundation’s blueprint for a second Trump administration, says local governments should retain control over zoning laws that affect housing issues.

Christine Cousineau, a lecturer in urban design at Tufts University, says she thinks Americans are beginning to give up on the dream of the large, single-family home with a yard they can walk around in.

“People are desperate to find housing rather than aspiring to a particular type,” she says.