Ontario, California - an exurban community has long been more affordable that Los Angeles

The West Faces a New Type of Housing Crisis

Throughout the West, particularly the Anglosphere, housing costs are ravaging the middle class. Home ownership, long the key to social mobility, is on the decline, particularly among younger generations and minorities. According to the Organization for Economic Cooperation and Development, house prices in high-income countries have been rising “three times faster than household median income over the last two decades,” causing the standard of living “to stagnate or decline.”

Unlike previous housing crises, this one is not primarily caused by mass displacements due to wars or natural disasters or population growth. This is largely a self-inflicted wound brought about by planners and a political class that has skewed land markets and obstructed the middle-class hope for home ownership.

Voters are aware of what is happening. In May, housing ranked second only to inflation in a Gallup survey of Americans’ financial worries. In a Harvard poll of eighteen- to twenty-nine-year-olds this year, housing ranked as the third-most important issue overall, after inflation and healthcare. In California almost 70 percent of residents consider housing costs a major concern while in Britain, housing ranked well ahead of defense, security, poverty and crime as a top priority for voters.

At the Democratic National Convention in August, Barack Obama claimed that “Kamala understands” what is needed to restore housing affordability. Vice President Harris has become strongly identified with the developer-funded YIMBY movement — short for “yes, in my backyard” — which often assigns responsibility for housing shortages to local governments that try to limit development. This encourages an ever-louder call, embraced by Harris, to nationalize housing policy, something that has won over some usually less-than-statist market conservatives.

In reality, Harris’s proposals include policies that have already failed or will make things worse. She has emphasized $25,000 tax breaks for new homeowners, which most economists see as likely to boost home prices. She has embraced regulatory policies that the 2020 Economic Report of the President found caused “a house price premium resulting from excessive housing regulation” of 100 percent in the Los Angeles and San Diego metros, and 150 percent in the San Francisco Bay Area.

As with nearly every other policy position in 2024, Harris is a newfound convert to YIMBYism. As California attorney general from 2011 to 2017, Harris, a strict adherent of California’s climate policies, worked to limit building on the suburban fringe, which has helped stymie production over the past two decades. Due largely to such restrictions, California now suffers the country’s second-lowest home ownership rate, and has experienced an extraordinary rise in housing prices that has driven prices well beyond the capacity of most residents: one recent study found that the median family in San Jose or San Francisco would need 125 years (150 in Los Angeles) to collect a down payment; in Atlanta or Houston the figure is twelve years.

Similar issues have surfaced in other Anglosphere countries, such as the United Kingdom, Canada and Australia. In the UK, the home ownership rate has plunged below 1985 rates. The Labour Party speaks of building on parts of greenbelts (which cover more land than all of the nation’s urban zones), but public pressure, and the powerful green lobby, could force them to hold back and return to a density-oriented strategy. New prime minister Keir Starmer’s team certainly should pursue the party’s expansive strategy: under current policies, projections show that nearly five million households will live in unaffordable housing by 2030.

Apologists for Britain’s housing shortage often blame the country’s relative lack of land — although less than 9 percent is actually urbanized. This excuse has even less purchase in huge countries like Canada (where 3 percent of land is urbanized); and Australia (less than 0.25 percent urbanized), where housing prices have risen four times faster than wages.

The Australian situation shows how regulatory restraints can affect even a country with historically high levels of home ownership. Australia’s rate of home ownership for people twenty-five to thirty-four dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing has dropped by 10 percent in the last twenty-five years. Economist Saul Eslake suggests that the 2021 home ownership rate among Australians in their mid-twenties to mid-thirties will be lower than in the 1947 census.

A similar decline has occurred in Canada — houses in cities like Vancouver and Toronto are now among the world’s most expensive, indeed more pricey than those in far more densely populated places like Los Angeles, New York or London. It’s occurring in the US as well, where, according to Census Bureau data, the rate of home ownership was 45.4 percent for Generation X, but dropped to 37 percent for millennials.

At the root of the housing crisis are policies designed to keep people from moving to the periphery — where they cannot be so easily dragooned into “living smaller, living closer.” This approach dates back to Britain’s 1947 Town and Country Planning Act, which backed the notion of restricting suburban and exurban growth. By the early 1970s, British planner Peter Hall suggested that the “speculative” value of land with planning permission in the UK was five to ten times higher than that of land without planning permission.

Read the rest of this piece at Spectator.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.