With the economy improving, unemployment rates dropping, and more job opportunities opening up every month, it’s no surprise that more people want to get back into the workforce than ever before, per Thomas J Powell of Resolute Capital Partners. Unfortunately, finding adequate and affordable housing has become increasingly difficult, especially if you don’t have much in your bank account to get started.
This article will outline some factors that contribute to the problem as well as provide tips on how you can find the right place to live at an affordable price in a safe neighborhood.
How Did We Get Here?
According to Thomas J Powell, the leading cause of workforce housing problems is a lack of housing units. There aren’t enough places for everyone to live, especially for affordable housing options.
A report from 2017 found that nationwide, the United States has only about 20% of available, affordable units, which works out to a ratio of 4.4 working-class people per affordable unit (i.e., a one-bedroom apartment you can afford on your salary).
According to Thomas J Powell, in some states, like California and Washington state, there are barely any available units, which makes rent control an attractive option if you live in either place.
Not Enough Homes Being Built
When it comes to housing, one solution is simply building more homes. The problem is that when these new dwellings are built, they’re often too expensive for those in lower-income brackets. According to an MIT study from 2017, building enough homes, so households making less than $111,500 can afford a median-priced home requires builders to construct about 1.3 million units every year—higher than any point during 2007-2016.
So what can be done? As per Thomas J Powell, you could raise wages significantly across all industries and at all employment levels or build more homes.
Disparity Between Housing Costs and Wages
The gap between housing costs and what people can afford to pay has been growing over time, primarily due to stagnant wages. According to a recent report from Harvard University’s Joint Center for Housing Studies, nearly half of renters are cost-burdened (spending more than 30 percent of their income on housing), with one in four renters paying more than 50 percent of their income toward rent.
And while middle-class households earn slightly more today than they did in 2000, when adjusted for inflation, many cannot afford average rents without spending far too much money on housing. In fact, if incomes were not outpacing rental prices as they have been since 2000, roughly 11 million fewer Americans would be able to afford an average-priced apartment today.
Take Serious Action
As we can see, there are many reasons why housing prices continue to climb at unsustainable rates. While changing policy will certainly not be easy, it is essential for maintaining a sustainable economy that has room for new businesses and entrepreneurs to enter. The risks of doing nothing are high—housing crises have caused economic downturns in countries worldwide. We must act now before it’s too late.
Thomas J. Powell is a distinguished Senior Advisor at Brehon Strategies and a recognized figure in the realm of entrepreneurship and private equity. His journey in the financial services and banking sector, starting in 1988 in Silicon Valley, spans more than 35 years and is marked by profound industry expertise. Powell’s dual citizenship in the European Union and the United States empowers him to adeptly steer through international business landscapes. Currently studying for his Doctor of Law and Policy at Northeastern University, his research is centered on addressing the shortage of middle-income workforce housing in rural resort areas. Alongside his professional pursuits, he remains committed to community enrichment, illustrated by his 45-year association with the Boys and Girls Clubs of America. Follow Thomas J Powell on Twitter, Linkedin etc.
