Published on October 22, 2020
It isn’t just supply and demand. We look at the complicated history and skewed incentives that make “affordable housing” more punch line than reality in cities from New York and San Francisco to Flint, Michigan.
New York City’s problems are not unique to New York. Thousands of cities in the U.S. are looking at big budget shortfalls; 1.5 million city and state workers have already been laid off, with more cuts likely without federal aid. And while cities have become more and more popular over the past few decades — an urbanizing trend that no one saw coming, especially after so many cities suffered so badly during the 1970s — the data seem to show that we may have hit peak city a couple years ago.
If you want to live and work in or near a place where a lot of other people want to live and work, you’ll have to pay for the privilege. Housing markets, even though they are more complicated than many other markets, still adhere to the laws of supply and demand. So, many of the most desirable cities in the U.S., and around the world, have been expensive for quite a while.
“In the decades before Covid, there was this growing affordability problem in many American cities.” says Jacob Vigdor, urban economist and professor of public policy and governance at UW. “If you go back to 1960 or 1970 the typical renter paid somewhere around 15, 16 percent of their income in rent. If you look at the most recent data, the median renter is paying more around 24, 25 percent of their income in rent. And in a lot of places, you have renters that are paying more than a third and sometimes more than a half of their income.”
Continue reading at Freakonomics.
Originally written by Stephen J. Dubner for Freakonomics.