America’s Housing Crisis Could Imperil Trump’s Presidency

By on January 10, 2019

From CityLab:  Donald Trump is right that the United States desperately needs more walls. He’s just wrong about their ideal dimension, purpose, and location. The U.S. need not spend tens of billions of dollars on a single barrier extending along the southern border between the United States and Mexico. Rather, what the suddenly wobbly U.S. economy could really use is millions of walls at 90-degree angles. I mean lots and lots of housing.

America’s last housing crisis was fairly complicated. Too many families bought houses they couldn’t afford, too many banks staked huge positions on housing debt, and when home sales, home prices, and on-time mortgage payments declined at the same time, the deck of cards came crashing down.

Today’s housing crisis is simpler: not enough supply. After the Great Recession, the adult population grew, but construction spending fell. In 60 years of record-keeping by the Federal Reserve Bank of Kansas City, home-building per household has never been lower.

Scarcity breeds inflation. So the predictable result of the housing crunch has been rising home prices, which have locked out young families from their piece of the American dream. The homeownership rate among late-20- and 30-somethings, which had held steady at around 50 percent since the 1970s, has plunged into the low 30s.

Housing is mostly a local issue. Construction is funneled through local zoning rules, demand is shaped by local jobs and local wealth, and local transportation routes determine the best location for new units.

But one nationwide impediment to more housing is a shortage of construction labor; young Americans don’t seem remotely interested in becoming cement masons or carpenters. That means the housing industry would vastly benefit from an influx of immigrants—precisely the thing Trump wants to stop at all costs with a giant border wall.

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About Dede Hance