Money For the Rest of Us

The Housing Affordability Crisis: What Caused It and How to Fix It

Sep 11, 2024

Discover the shocking 40% rise in housing prices and rents, driven by restrictive zoning and central bank policies. Explore why half the global population is frustrated with housing affordability. Learn how the Great Financial Crisis shaped today's market and the consequences of short-term rentals. Delve into government efforts to boost housing supply and potential solutions like reducing zoning restrictions and encouraging auxiliary dwellings. Find out what individuals can do while waiting for the crisis to ease.

23:54

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The dramatic increase in home prices has caused median households to allocate nearly 44% of their income to housing costs today.

A critical shortage of new home construction, influenced by stricter lending and zoning regulations, is contributing to the housing affordability crisis.

Deep dives

Rising Home Prices and Affordability Challenges

The housing affordability crisis has been exacerbated by dramatic increases in home prices, with the average U.S. home price rising over 38% since January 2021 and 50% since 2015. Home price-to-median household income ratios have reached an all-time high of 7.74, indicating that a significant portion of income is being allocated to housing costs. As an example, a median income family today can expect to spend about 44% of their income on housing, a stark contrast to just 28% in 2013. Additionally, the rental market mirrors this trend, with 50% of renters considered cost-burdened, spending more than 30% of their income on rent and utilities.

Intro

2min

The Alarming Rise in Housing Costs and Its Consequences

8min

Zoning Laws and Housing Crisis

5min

Housing Crisis Solutions and Central Bank Impact

9min

Addressing the Long-Term Housing Affordability Crisis

2min

What caused the 40% price increase in houses and rents, and what are governments doing to try to fix the problem.

Topics covered include:

Why 50% of the global population is frustrated with the lack of affordable housing
How the housing collapse as part of the Great Financial Crisis contributed to today's affordability crisis
How central bank QE programs have magnified the housing crisis
How restrictive zoning and short-term rentals contribute to the housing crisis
What governments are doing to encourage more housing supply
What individuals can do until housing becomes more affordable

Sponsors

Delete Me – Use code David20 to get 20% off

LinkedIn Jobs – Use this link to post your job for free on LinkedIn Jobs

Insiders Guide Email Newsletter

Get our free Investors' Checklist when you sign up for the free Money for the Rest of Us email newsletter

Our Premium Products

Asset Camp

Money for the Rest of Us Plus

Show Notes

Concern over housing costs hits record high across rich nations by Valentina Romei and Sam Fleming—The Financial Times

Home Price to Median Household Income Ratio (US)—Longtermtrends

Home Ownership Affordability Monitor—Federal Reserve Bank of Atlanta