Housing experts say there just aren't enough homes in the U.S.

Finding an affordable place to live in the U.S. can feel pretty impossible whether you're a renter or a buyer.

To begin with, there's a massive shortage of homes — somewhere between 4 and 7 million. And those who are able to find homes are spending a much bigger chunk of their paycheck than in recent years.

Natalie French was renting an apartment with a roommate in Albuquerque, New Mexico, when they received a notice that their rent was going up by more than 200 dollars a month. With the added pet fees, they were put out of their price range.

French and her roommate ultimately decided to move out and part ways — and for French, that meant leaving Albuquerque altogether to go back home to live with her mother,

"I would love to be able to afford a place on my own, but with my salary, that is not feasible."

It's a difficult situation not just for renters, but also for prospective home buyers. Ellen Lamont lives in Denver, Colorado with her partner. They put down offers on more than twenty homes because they kept losing out to other buyers, before finally closing on one.

"This idea of having your dream home is not realistic. Even at my age, it's just – where can I live? Where can I even get a place?"

All Things Considered host Mary Louise Kelly spoke with Alex Horowitz, the director of Pew's Housing Policy Initiative, to help understand why affordable housing feels like a pipe dream, and what can be done about it.

She began by asking about the shortage of 4 to 7 million homes in the U.S., and whether that was a shortage of all homes or affordable ones.

This interview has been lightly edited for length and clarity.

Alex Horowitz: We're short on all homes. Full stop. There just aren't enough of them. And that means that existing homes are getting bid up because we see high income households competing with low income households for the same residences since just not enough are getting built.

Mary Louise Kelly: And what's driving this? Why?

Horowitz: So restrictive zoning is the primary culprit. It's made it hard to build homes in the areas where there are jobs. 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.

Kelly: I want to ask if there are any cities getting this right. Can you give me an example of one that has looked at it's zoning laws and said we could actually make this more affordable if we change things?

Horowitz: There are definitely cities that are getting this right. And we've seen a lot of changes in recent years to allow more homes, especially the kinds of homes that are in short supply, namely apartments, townhouses, duplexes and homes that don't cost as much as a detached single family house. Minneapolis is a great example. Minneapolis updated their zoning to make it much easier to build apartments near commerce and near transit, in part by eliminating parking minimums and also by making permitting easy. And it worked. They're producing housing at triple the rate of the U.S. and the rest of Minnesota, and that has meant that they've kept their rents flat for about seven years.

Kelly: Is there a downside? I'm thinking of people trying to find a parking place, for starters.

Horowitz: So we see that in places that have actually eliminated parking minimums, that we see fewer people driving at all and having cars and we see vehicle miles traveled decrease because people can get around via other mechanisms. But look, change can be disconcerting. And we certainly see some local elected officials and some residents concerned about changes in their community, even though the evidence suggests that allowing more homes is mostly beneficial by improving affordability and reducing homelessness.

Kelly: Okay, so let's drill down first on the renters side of this. We heard from Natalie French, the renter who had to move out of her apartment when her rent went way up. How typical is that? Is that happening to people all over the country?

Horowitz: That is happening. And rents have been rising rapidly, up about 30% in the U.S. since 2017, with median rents now hitting about 1400 dollars a month. And we've never been at a time before where half of renters were spending 30% or more of income on rent. But that's happening for the first time.

Kelly: And then on the homebuying side, we hear a lot about mortgage rates. They keep climbing. They don't look like they're coming down anytime soon. Are there other factors that make this a tough time to buy?

Horowitz: A lack of starter homes is really keeping it difficult for first time homebuyers to crack the market. And that is because traditionally starter homes are small homes. That means a home on a small lot, maybe a townhouse. And we're seeing far fewer of those come onto the market. Many jurisdictions require large minimum lot sizes, and that means that land costs end up being a big part of the equation. Houston is the place that has had the most success in bringing starter homes into the market. And it was by reducing their minimum lot size. And then 80,000 townhouses followed.

Kelly: So does it boil down to the double whammy of: there aren't enough homes full stop, and even if there were a home, it's really hard to afford a mortgage in an era where mortgage rates are sky high.

Horowitz: Mortgage rates are a piece of the puzzle, but at a fundamental level, even when mortgage rates were low, it was hard to buy a home for the first time because there simply aren't enough of them. And a lot of the ones that we have are bigger than what people need. U.S. household size is at an all time low of 2.50 people per household. And so we see homes that are bigger than what a lot of residents are looking for.

Kelly: What about financing and lending? Setting aside what mortgage rates are, is it more difficult than in generations past just to get a loan to buy a house?

Horowitz: Oh, it's gotten much more difficult to get a mortgage. The availability of mortgage credit tightened dramatically during the Great Recession, and it never bounced back. So for someone who gets a mortgage today, they're likely to have a higher credit score than someone who's gotten a mortgage in the past. And that means simply fewer people are eligible for homes. And the cost to originate a mortgage has roughly tripled since 2009. And that has meant that lenders don't offer many small mortgages because they tend not to make money on them unless the mortgage is for over about $150,000.

Kelly: So many different factors at play here. You know, when we call you back, Alex, in two, three, four, five years from now, are you optimistic that more Americans who would like to buy or rent our home will be able to do so?

Horowitz: I am. I'm optimistic because of the steps that are taking place at the state and local level. It's really been remarkable how quickly we're seeing states and cities act to legalize lower cost homes, to reduce the parking minimums that have made apartment buildings difficult to build. And we haven't seen this kind of state level action before, because when a state acts, it increases the housing supply everywhere in the state. A state government has to act in order to fix regional housing affordability. But we're seeing that happen for the first time over the past few years.

This story was edited by Mallory Yu and William Troop

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