Housing Market is an alt cause to inequality

The US housing shortage isn't just fueling an affordability crisis. It could be contributing to several of the major problems the country is facing. Imagine you're a city-dweller living paycheck-to-paycheck. You're trying to save so you can afford a down payment on a home someday, but there's not much left to stash away after paying rent. A few years later, you buy a home that's probably a little more expensive than you can afford. You used to walk to work, but given you now live an hour away from your job in the city, you begin spending much more time in a car. You make plans to start a family over the next year, but given the cost of the home, the extra years it took to finally obtain it, and its modest size, you decide to aim for a fewer number of children than you had previously envisioned. This is the gist of the "housing theory of everything," coined in 2021 by economists Sam Bowman and Ben Southwood and housing advocate John Myers. They wrote in the Stripe-owned online magazine Works In Progress that the substantial shortage of homes in the US is a key driver of more than just falling housing affordability in recent decades. "Western housing shortages do not just prevent many from ever affording their own home. They also drive inequality, climate change, low productivity growth, obesity, and even falling fertility rates," they said. While roughly two-thirds of US households are owner-occupied, the country is short between 1.5 million and 6 million homes, according to various analyses. The housing market's crash during the Great Recession led the industry to pull back on construction for many years, and materials and labor shortages during the height of the pandemic fueled another slowdown. Some have pointed to complex rules and regulations — many of them related to environmental concerns — that have made it more difficult to build homes. With the US homeowner vacancy rate — the percent of units available for occupancy — near record lows, the lack of supply has contributed to soaring prices. As of last June, the combination of elevated prices and interest rates made the housing market "more unaffordable than at the peak of the runoff in 2005," Mark Palim, Deputy Chief Economist for Fannie Mae, told Insider. The housing theory of everything, however, suggests that this lack of affordability is far from the only American problem the housing shortage is contributing to.