The New Housing Crisis

The U.S. media and the politicians like to pretend that the economy has recovered and is picking up again. If you are among the less than one percent who own the banks, the corporations, the land, the wealth of this country, this is true – in fact times have rarely been better for them. But for the working class of this country – those who do the actual work that makes society run – there has not been any recovery. And today there is a new housing crisis for working people.

Can’t Afford to Live

In most major cities across the country housing costs have been skyrocketing. Most financial advisors and government housing agencies claim that spending more than 30 percent of one’s income on housing costs creates financial burdens on families. Today, over half of households spend more than 30 percent of their income on housing.

Nationwide, 25 percent of households pay over half their income in rent – in California, New York, New Jersey, and Florida, it’s over 30 percent of households. Since the foreclosure crisis began in 2007, the number of households paying half their income in rent has increased by over 26 percent to 11.25 million households. Housing costs keep increasing and the wages of workers are not keeping up. Since 2010, housing costs have risen at twice the rate of wages.

When housing eats up so much of our pay checks, there are enormous consequences. This means that the majority of working families are really one paycheck away from not being able to afford rent. It means that any unexpected expense – a medical cost, a car breakdown, anything – won’t be able to be covered. It means cutting corners in every other aspect of our lives – our food, our health, our safety. It means the level of stress workers are living under is constant and intense. It means workers have continued to rely on credit card debt just to get by – with over 37 percent of households holding credit card debt greater than their total savings. It means many families are one paycheck away from a major financial crisis and possibly homelessness.

Treating The Homeless Like Criminals

As a consequence of this housing crisis, there are record numbers who are homeless across the country. An estimated 3.5 million people are homeless in this country. On any given night, over 580,000 people sleep on the street. The number of homeless children today is one in thirty, about 2.5 million children experiencing homelessness per year. And as the homeless population continues to rise, cities are treating the homeless like criminals. Around the country, the number of laws criminalizing sleeping in public or in vehicles has doubled. The homeless population makes up a greater percentage of arrests – in California and New York, over 14 percent of all arrests are of the homeless. As poverty has increased, as jobs have declined, as housing costs continue to skyrocket – cities have made it a crime to be homeless.

Banks Making a Killing

Most financial analysts say a major reason for the continuous rise in housing costs is simply because the supply of housing is smaller than the demand for it – new construction of rental units is not meeting the demand. And wages just aren’t keeping up with the housing costs. But this explanation doesn’t tell the whole story.

A major reason there are an increasing number of renters is because over seven million people lost their homes in the housing crisis that began in 2007. The majority of these households were forced into renting even though the number of rentals was not increasing.

Many families applied for federal relief programs to try to keep their houses but the government allowed these programs to ultimately be decided upon by the banks themselves. And after about seven years of these programs, it turns out that in over 80 percent of cases, applicants for relief were rejected by the banks. The banks would rather keep people out of their homes than renegotiate the mortgages. Having banks decide this is ridiculous – the banks were the ones who scammed millions of families into these mortgages in the first place. They shouldn’t be deciding whether or not families are provided with relief from the scams they carried out.

Even though federal interest rates have remained low, new federal lending rules made it extremely difficult for those without very high incomes (over $200,000 per household) to qualify for loans. So this meant that even more people were forced into renting. As of 2014, the percentage of homeowners has reached its lowest level in 48 years.

And meanwhile, federal, state, and city governments have done nothing to increase the number of affordable housing units, and nothing to impose rent limits. The majority of new housing construction is typically of more expensive units, only helping to increase the rising costs of housing.

The winners in this game are the same: the banks and the tiny class of owners of the vast amount of wealth. They buy up more property, issue out more loans, and ultimately suck out more wealth from working people across the country. But this can’t go on forever – there has to be a breaking point.