America has a housing appreciation policy. Population growth results in higher housing costs.
"The more populated a city is, the more expensive homes will be, which generally reserves homeownership to those with high incomes," NerdWallet home expert Holden Lewis told National Mortgage News. "Lower incomes among renters combined with high housing costs means it's an uphill battle for those who are looking to save for a home in America's most populated cities."
This trend plays out in the aggregate across the entire U.S. housing market.
Check out the hottest markets. Aside from San Diego, they all have higher population growth rates than the nation as a whole. San Diego is what happens when a locality won't, or can't build enough additional housing to sustain higher population growth. But thanks to the aggregate pressures from national population growth, housing prices still go up.
Housing price increases as a singular measure don't portend doomsday. But when they go hand-in-hand with decades, or even generations of stagnant or slowly raising wages, it results in a fundamental rezoning of our society.
[T]he affordability crisis has indeed reached historic heights, and the data is shocking. Since 1960, renters' incomes have increased by only 5% while rents have risen 61%.
Can the value of housing continue to grow faster than wages increase? Yes. And it will, unless something changes.
What could the implications be? Diverging wages and housing costs pose a clear challenge to the essence of America as a middle-class nation, America's class mobility, our political system, and our social fabric. Each of those are on life support already, according to various experts spanning the ideological spectrum.
This is not an existential question (we'll still be a nation), but it is a profoundly definitive one (it's a piece of "who we are"). An ever-yawning chasm between housing costs and wage growth is a monumental problem.
Voters are certainly concerned. Again via Koprowski:
People are feeling the squeeze, and they are expecting solutions. Eighty-two percent of the public thinks it’s important for elected leaders to address housing affordability, and 83% agree that elected officials aren’t paying enough attention to the cost of housing and the need for more affordable housing. And 76% say they are more likely to vote for candidates that have detailed plans for making housing more affordable.
One solution would be pulling back on Congressionally-mandated population growth, making housing more affordable and labor more valuable.
In 2010, Jimmy McMillan went viral as a candidate for New York governor representing the Rent Is Too Damn High Party. A memorable and charismatic character, McMillan provided great "political theater" for CNN and even SNL. But the exchange itself doubles as a display of symbolism. The debate moderators couldn't contain their laughter, and neither could eventual winner Andrew Cuomo. But as Cuomo composed himself to deliver his statement, he felt compelled to agree with McMillan before continuing. This is a powerful topic to which elites must pay lip service.
Meanwhile, cities and counties have been feverishly at work on housing issues. They've adopted and are enacting measures to combat the as-yet unquenched demand for more housing. But changes in zoning laws, government programs or favorable taxation schemes have all proved insufficient. The polling shows that their measures have fallen flat with their constituents. It doesn't seem to matter whether cities "build up" or "build out." Capital-owners – whether they be corporate high-rise owners or individuals buying up properties for rental – are the obvious beneficiaries. Individuals without a foothold in the market already find it progressively more difficult to gain one.
Witness Denver's trends. Ben Markus of Colorado Public Radio last year found:
Mile High City homeownership rates have fallen from more than 72 percent in 2005 to 53 percent today... [The] focus on apartments is also part of the problem. These new, almost exclusively for-rent apartment buildings drive Denver housing construction. With so few homes on the market, the cost to buy a house is on the rise... That supply imbalance, coupled with the younger population's lower wages and high student debt, will likely keep the homeownership rate low for some time.
Michael Roberts at Westword reported in December:
A new study estimates that it will take 83 percent of Denver millennial renters twenty years or more to save enough for a 20 percent down payment on a median-priced condo at current market value.
Eighteen months earlier, it was 16 years instead of 20.
The "haves" and the "have-nots" may soon become the "own" and the "own-nots". The rhetorical former set has been dismissed effectively in the past as just a snapshot view in an America where opportunity and class mobility are plentiful. Distressingly, the latter will have more substantive underpinnings, as we are on the cusp of a system where ownership will define class and the providence of family pass-downs will most often determine one's economic viability. There's nothing more fundamental than housing, and every single American has a stake in this.
There are many, many facets of the interplay between population growth and housing that I did not have the time or space to address here. Please engage with me via the comments section or on Twitter. This is merely the first of many future pieces on this topic.
ANDREW GOOD is the Assistant Director of the Media Standards Program for NumbersUSA
Updated: Tue, Apr 16th 2019 @ 10:35am EDT