Are we facing a true housing affordability crisis?
- Peyton Widen
- 5 days ago
- 2 min read
Housing affordability has become an eye-opening economic issue in the United States (US). Both renters and potential homebuyers are facing record‑high costs. Across the US, the average rent is $1,627 per month for just a one-bedroom apartment. The average rent in the US has grown at a significantly faster rate than household income. This has been the major reason why renting and buying apartments or homes has become increasingly more difficult. This price difference was created from a long‑term shortage of millions of housing units. That gap has pushed prices far beyond what many households can reasonably afford. These economic pressures have created some barriers that are difficult for buyers to overcome, especially for first-time renters and homeowners.
We began to see this shift as early as late 2020, following the COVID-19 pandemic. Rent prices have gone up due to a combination of factors, including inflation, low inventory, barriers to homeownership, and shifts in tenant demand. New rental units are also more expensive to build because of high construction costs and rising demand from higher‑income renters who can’t afford to buy homes. This shift has intensified the competition for all rentals. This leaves many tenants spending significantly more than the recommended share of their income on housing. When spending more on housing, this also leads to less money for essential spending each month which may impact the lifestyle many Americans want to live.
This crisis has a larger impact than just paying a little bit more for rent or a house. When housing becomes unaffordable, workers have less flexibility to relocate for better jobs, which slows down the general labor mobility and economic growth. When the lower-end rental units increase in price, the rate of homelessness will also increase if that group of people can’t afford the cheapest rent. Without policy intervention and increased construction costs, the affordability crisis is likely to get worse before it gets better. There is no easy fix since this housing crisis comes from several issues that all connect and cannot be solved by one solution.
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