US GDP Held Back By Housing

The US may be past the most recent era of foreclosures, but housing now has two other affordability issues: high prices and high rents. Several cities like those in the Bay area, New York, DC, and Seattle are seeing price gains that are good for sellers and bad for buyers. As for renters, many foreclosed houses were bought by corporations and turned into rentals, new apartments are predominantly built as luxury single bedroom units, and increasing density frequently runs into resistant regulations. People with lower incomes are finding it difficult to rent or buy. Mortgages are more difficult for them because lower wage jobs aren’t seeing wage growth. Renting is difficult because affordable spaces tend to be far from city and job centers. The impact is estimated to be 10% of US GDP. One consequence is that people in poor parts of the country can’t afford to move to areas with better jobs because there’s no place for them to live. The issue has risen to the White House, but the solutions will probably be local because that’s where the incentives for employers, contractors, employees, and municipalities will be applied. Unfortunately, there’s no mechanism to even the inequities in wealth and income between places as diverse as Silicon Valley and Appalachia.

(Click on the graph for the link.)

“The Obama Administration Is Finally Targeting The NIMBY Nonsense That’s Made Cities Unaffordable” – Slate