Katie McKellar, the writer on housing issues for the Deseret News, had a long piece published a couple of days ago that really put into perspective the generational inequalities created by the current housing affordability crisis.
McKellar tells the issues that first-time homebuyers, and even renters (recently, especially renters!) are facing as they look for housing. As she explains, much has to do with the dynamics of existing market conditions and building climate. And now most recently, inflation and interest rates will likely exacerbate things.
Overall, the average millennial has experienced slower economic growth since entering the workforce than any other generation in U.S. history, The Washington Post reported in a story labeling millennials “the unluckiest generation in U.S. history.”
And now, as the price of housing shoots higher and higher into the clouds with no clear end in sight, millennials — and yes, Gen Z — are finding it nearly impossible to afford a home. Especially a home like the one their parents bought years prior.
“It’s a remarkably positive story for Americans who own a home; it’s also inseparable from the housing affordability crisis for those who don’t,” the Times reported. “For them, rents are rapidly rising. Inflation is whittling away their incomes. And the very thing that has created all this wealth has pushed homeownership as a means of wealth-building further out of reach.”
With the cost of housing what it is, the danger is that the upcoming generation will likely have a considerably lower standard of living. So much more of their income will have to be devoted to paying for housing, leaving less for everything else, and the housing they do get will likely be something substantially less than what previous generations had at their stage in life.
“What it reveals, I think, is the nature of wealth in America and this danger of housing being sort of a sink for wealth,” Lara Gale said. “You can’t have financial stability tied up in an asset that is necessary for survival. And yet that is the case.”
As everyday Americans compete with each other — and investors — for housing that simply isn’t available, “you’ve got this bizarre lottery situation,” Lara Gale said, “with an asset that is treated as though it’s some kind of commodity when in fact it’s as necessary as water.”
While McKellar writes mostly about market and economic factors, she doesn’t leave out the land use regulations aspect as a factor.
While baby boomers continue to hold a majority of the nation’s wealth, they often “use that as power to entrench the wealth that they have,” Kimbrough said.
Thus, the NIMBY (not-in-my-back-yard attitude) is born. They worry higher density living will drop their property values (a claim that’s not supported by evidence here in Utah, according to University of Utah housing researchers). Meanwhile their children and grandchildren continue to struggle to find a place to live.
“That lack of housing supply has really hit hard the younger generations that are less likely to already own a house,” Kimbrough said. And yet, the NIMBY attitude is motivated by this belief “that they need to do this to protect their wealth.”
Benjamin Keys, a professor at the Wharton School of Business, said, “There’s actually something that’s kind of pernicious about this,” as millions of people have made trillions of dollars the last two years by doing nothing.
“But it’s worse than that,” he continued. “It’s not that they’re not doing anything; it’s that they’ve aggressively blocked development in so many places.”
For this very reason, as well as for the benefit of having more diverse, dynamic neighborhoods and communities, I believe our local planning commissions and elected councils must do more to accommodate housing, and particularly entry-level, affordable housing. We have to recognize that there will be grumbling from those who already have theirs, and not let that dissuade us. Do it thoughtfully, so it will enhance the neighborhood and community, but it WILL be different, and that’s okay! Our future generations need this, and who’s speaking up for them at these meetings?
You’ll hear more about this from me in this space, stay tuned.