Housing costs continue to rise, leaving everyday Americans paying the price. Skyrocketing housing prices have been a focal point of the working class. The drastic increase in housing costs causes millions to ask why.
The U.S. Census Bureau states that the median price of homes increased by 150%, jumping from $165,300 to $412,300. Despite the significant increase in home prices, the median household income remains $74K.
Inflation, the gradual increase in the cost of goods and services over time, drives the housing market. A healthy amount of inflation contributes to economic growth as long as the average citizen’s income increases alongside it. This has not always been the case. According to the Joint Center for Housing Studies of Harvard University, the median household income only grew by 2% from 2001 to 2022. In contrast, the median rent surged by 21%. Simply put, the surging cost of living has left many struggling to make ends meet.
The root cause of rising housing costs is straightforward: supply and demand. Zoning laws that regulate how property can be used in specific areas exacerbate this issue. Homeowners use zoning laws to boost the value of their property. By having lawmakers restrict where apartments can be built and how far away houses must be from each other, homeowners artificially increase the value of their homes. As the amount of land available for new construction dwindles, so does the supply of housing.
Alex Horowitz works as the director of PEW’s Housing Policy Initiative, an organization researching the causes of the increase in house prices. He explains that zoning laws contribute to the highly competitive real estate market.
“Restrictive zoning is the primary culprit. It’s made it hard to build homes in areas where there are jobs.” Horowitz said. “And so that has created an immense housing shortage. And each home is getting bid up, whether it’s a rental or whether it’s a home to buy.”
The rising price of housing remains on people’s minds, especially with the approaching election. In a Pew Research study, 73% of people surveyed consider strengthening the economy as a top policy priority. In response, both presidential candidates created policies targeting housing costs.
Kamala Harris, the Democratic nominee for the 2024 presidential election, promised to build 3 million new homes to combat the rising cost of housing and provide $25,000 to first-time home buyers. Republican presidential nominee Donald Trump proposed lowering interest rates, restricting illegal immigration, and portioning federal land for housing.
Regardless of which approach is taken, if current trends persist, house prices will continue to rise and become even more out of reach.
