In recent weeks, there have been articles claiming that the housing market is set for a huge rebound, but again, articles like these don’t live in the realm of what most Americans actually experience on the ground. As a recent article in CNBC details, “The average rate on the 30-year fixed has been on a wild ride since the start of the COVID pandemic. It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022. Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.” The optimism cited in the article is solely due to mortgage rates coming down from an already record high but still hovering at a colossal 7%. High mortgage rates combined with high median home prices still create a completely inaccessible housing market for most Americans. The optimism cited in the CNBC article is the type of fantasia meant to blunt how truly unmanageable the housing market in this country is for many people. Part of why the Fed’s recent monetary policy has created such an unwieldy housing market is their moves to tame inflation largely went after the wrong actors. Numerous studies have been done in the past year indicating that the principal cause of soaring inflation in 2021 and 2022 was corporate profiteering, companies choosing to raise prices exponentially simply because they could. Now, there were certainly other factors involved, but the continual raising of interest rates mostly served to make the housing market completely inaccessible while doing absolutely nothing about rampant corporate profiteering. As a result, we now have prices that are still extremely high in most sectors due to the inflation of previous years and a housing market that has gotten completely out of hand due to the Fed’s recent monetary policy. It’s not a sustainable formula for the average family. Housing becoming inaccessible to vast swaths of Americans has cascading effects. As a result, rent becomes far higher in most areas, as there is much more demand to rent in an extremely tight housing market. When rent and housing go up exponentially, then homelessness often goes up as well. On that note, a December report by the Department of Housing and Urban Development (HUD) found that more than 650,000 people nationally were living in shelters or outside in tents or cars. To put it in perspective, that is a shocking 12% increase from the year before. To homeless advocates, it’s sadly an expected outcome. “We simply don’t have enough homes that people can afford,” says Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness. “When you combine rapidly rising rent, that it just costs more per month for people to get into a place and keep a place, you get this vicious game of musical chairs.” As a December NPR article about the HUD report details, “Homelessness has been rising since 2017 in large part because of the country’s massive shortage of affordable housing. There was a pause during the pandemic, and Biden administration officials say that’s because of sweeping federal aid that kept people from getting evicted. But, last year, in a triple whammy, that aid started running out. Inflation spiked to its highest level in a generation, and median rent hit a record high. Research has found that where rents rise, so does homelessness. This year’s big jump was driven by people who lost housing for the first time, which Biden administration officials say reflects the sharp rise in rent. The largest increase was among families, and the count also found a significant rise among Hispanics. Nearly 40% of the unhoused are Black or African-American, and a quarter are seniors. The annual count does not include the many people who couch surf with friends or family and who may be at high risk of ending up on the street.” In addition, many lower-income renters are paying more than half their income on rent, which is generally considered a serious indicator that someone could potentially fall into homelessness. Housing and homelessness are tests of a society’s priorities. Housing is fundamental to the security of families, and without it, it leads to myriad problems and children being exposed to incredible instability. Homelessness and housing insecurity rips at the fabric of a society and exposes its horribly skewed priorities. There’s absolutely no reason to have the level of homelessness we do in America. It’s a series of discreet policy choices that have been made over decades that have led to this point. One of the core reasons that media discourse about the unemployment rate and the S&P rings so hollow to so many Americans is that the fundamentals of their existence feel so unstable. And the number one sector contributing to insecurity is housing. When something as fundamental to one’s existence as a roof over your head feels unstable, it’s hard to feel confident in anything else. We haven’t prioritized the economic basics and our economic foundation in America, and as a result, everything feels wildly unstable. It’s a choice of our government to have everything feel that way, not some law of nature. It’s always important to remember that. 18
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