Red, Blue & You: Making Housing Affordable Again
At the core, we simply need more housing of all types to help supply meet demand.
Housing affordability has become one of the greatest public policy challenges of the 21st century. In 1972, the median home price in this country was just $26,800, or $189,500 in current dollars. Today, the median home price is $440,300, which amounts to a 132% increase in the last 50 years.
The cost of renting has skyrocketed as well, with the average monthly cost topping $2,000 per month for the first time this year. Given that housing is by far the largest cost in almost all middle- and low-income households, these trends are putting heavy pressure on struggling families.
The trends in Georgia mirror those across the country. While housing costs here are slightly lower than the national average, an influx of new residents and corporate investors prompted prices to shoot up across the board. Between July 2021 and July 2022, the average home price in Georgia increased by a staggering 25%. The increase in rent was even worse – some Atlanta neighborhoods saw rent increase as high as 83% during the same timeframe.
While some can weather this financial storm, there are many at-risk families that are barely holding on. Adjusted for inflation, wages have barely changed for most workers in the last 50 years while the cost of housing has more than doubled. As a result, there are now 340,000 renter households in Georgia that are extremely low-income and nearly three-quarters of those renters are spending more than half of their income on rent alone.
If current trends continue without intervention, we’re going to see housing, much less homeownership, fall completely out of reach for many Georgians. While this is a statewide problem, the burden falls disproportionately on major metro areas such as Atlanta. According to the Atlanta Regional Commission (ARC), Metro Atlanta lost nearly 60,000 units renting for less than $1,250 per month over a five-year span before the pandemic. In May, the median home price hit $430,000 in the region as well.
The City of Atlanta, led by Mayor Andre Dickens, has taken admirable steps to address this ever-growing crisis, promising to create or preserve 20,000 units of affordable housing by 2026. However, this falls far short of the 73,000+ units that are needed right this second.
Atlanta is not alone in its struggles. Augusta is short by 8,600 housing units per year, while Columbus faces a 3,800-unit deficit. Savannah is short by 9,300 units. A lack of new home construction in the 13 years since the Great Recession has driven up prices across all housing types, making affordable housing all the harder to find.
So, what can we do? Atlanta offers one example, investing directly in housing that is designed specifically to support low-income households. Cities have a lot of power to address this crisis, such as incentivizing the construction of multifamily buildings and easing restrictive zoning laws that make it so hard to build those properties in the first place. Particularly in dense metro regions, there are only so many single-family homes that can reasonably fit into an area, and fewer homes mean higher prices.
As with many challenges, it comes down to how much we’re willing to invest. Our state government is currently flush with billions in pandemic relief funds, courtesy of the Biden administration, as well as stronger- than-expected tax collections. Some of that money has been directed to a new program called the Georgia Investments in Housing Grant, but there is much more that could be done.
Massachusetts, for example, spurred production of affordable housing with legislation that streamlined approval processes for local permits. We could also take the shackles off municipalities that seek to control predatory landlords’ rent increases, something the state currently prohibits. Moreover, there are no limits on late fees and security deposits, allowing those same landlords to put even more hurdles in place when it comes to affordability.
This is not a problem that will be solved overnight. At the core, we simply need more housing of all types to help supply meet demand. The ease of building that supply, however, comes down to the willingness of our state and our cities to prioritize the need for more inclusive zoning and investments. If we do not take action now, this will be a problem that plagues us for generations.