09/21/2015

A report from Harvard’s Joint Center on Housing Studies and Enterprise Community Partners, an affordable-housing nonprofit group, provides further documentation of the growing housing crisis. The number of renters forced to allocate 50% or more of their income for rents is at an all time high, and growing rapidly, particularly among minorities, people with low-paying jobs (Walmart, the nation’s largest employer in 2015), and senior citizens on fixed incomes.

With declining or flatlined incomes and non existent job security, home loans are designed to minimize the risk of foreclosures. This policy is not limited to banks. The government, which is in one way or another (through Fannie Mae, Freddie Mac, FHA and the VA, among others) is exposed to roughly 90% of mortgage originations, simply cannot afford another real estate collapse. The result is that millions of people cannot buy homes, and consequently must either rent or live with others.

Construction of new homes for low income people, if it exists, is insignificant. The lack of financing effectively discourages big construction firms from meeting the need. In this environment, big landlords such as Colony American Homes and Starwood Waypoint are merging, a trend that may result in higher rents still.