Almost a quarter of homeowners in Dallas-Fort Worth pay more for housing than they can afford. And half of all renters are similarly cost-burdened, paying more than 30% of their income for housing costs.
That's part of a national trend, as a near record share of American households put more of their budget into housing than is considered financially healthy, increasing evictions and driving more people into homelessness, according to a new Harvard University analysis of the nation’s housing situation.
The report from the Joint Center for Housing Studies shows the share of people paying over half of their earnings toward housing is also up. In Dallas-Fort Worth, 1 in 4 renters and 1 in 10 homeowners are considered severely cost-burdened.
“After you pay the rent, which you have to pay to keep that roof over your head, what do you have left over to pay for everything else?” said Chris Herbert, the joint center's managing director. “If that’s not enough to pay for everything else, something's got to give. And you know what gives most [often]? Food, health care, transportation — things that you need to survive. … That's the squeeze that's happening in the housing market.”
The report reveals an array of troubling housing trends, most of them long-term and many exacerbated by the pandemic disruption.
Homeownership is harder to access across the nation after pandemic price spikes. In Dallas-Fort Worth, a household needs to earn about $116,000 per year to purchase the median-priced home, which costs $372,000. Only Austin had more expensive home prices in Texas.
Mortgage rates driven up by the Federal Reserve to curb inflation are pushing homeownership even further out of reach. Today’s home buyers with monthly payments 20% higher than those who bought a home a year ago, on average.
Troubling trends
Nationally, this helped price over 2.4 million potential homebuyers out of the market, the report concludes, disproportionately impacting Black and Latino households.
Taking the historical view, Herbert said rental affordability deteriorated dramatically coming out of the Great Recession, and then slowly improved during the 2010s and up to the pandemic. The sharp increase in rents during the pandemic — far greater than the wage increases workers saw — erased those gains.
While the surging growth in housing costs has slowed, rental rates — as well as home prices — remain significantly higher than they were before the pandemic. Herbert said he expects the share of housing cost-burdened people to increase through this year.
Trends in real estate development don’t offer much hope.
New single-family home starts declined by almost 11% nationwide last year — though new numbers show that may have been a temporary trend — and those that are being built are mostly high end.
New multifamily developments got underway at a much faster pace — almost 1 million multifamily units were under construction in early 2023, the highest number in decades — though a slowdown in multifamily construction is expected.
The units under construction are also overwhelmingly oriented toward the wealthy.
“This construction is not going to do much to help the low-end renters. Only 5% of these new units being built are affordable to the median renter,” Herbert said.
Deep inequities
The report pays considerable attention to the deep inequities that are produced and preserved by the nation’s housing market.
For example, rent growth declined more significantly in high-end Class A rentals than in more affordable Class C homes, offering greater relief to those with the most resources. Longer-term homeowners saw their wealth increase when home prices jumped, accruing an average of about $100,000 in home equity during the pandemic.
The nation’s persistent housing segregation and racial wealth gap mean White people benefited disproportionately, while Black and Latino households have felt the strain of rising housing costs more severely. While 3 in 4 White households own their homes, less than half of Black and Latino households do.
On a Zoom panel timed to the report’s release, Deputy Secretary Adrianne Todman said addressing inequality in the housing market are “paramount” to U.S. Department of Housing and Urban Development. She said the administration is focused on using every tool available to reduce roadblocks for first-time homeowners and to increase the availability of affordable housing.
“We are trying to find those solutions in those very discrete areas where we see that there are barriers and we think that it's working,” she said.
Todman said the Biden Administration has increased the number of housing vouchers available to help low-income renters make ends meet for the first time since the 1990s and is working to get even more approved by Congress.
The report also cites a dire need to invest in existing housing stock, which is aging and increasingly mismatched to the needs of the graying population. Older affordable housing developments are reaching the end of contractual obligations to offer lower rents, leaving their owners free to increase rents to whatever the market will bear.
The infrastructure and renovation needed to make sure existing affordable housing remains habitable are particularly high in historic communities of color where under-investment has left more homes vulnerable.
Climate change presents significant challenges to existing housing stock: Homes need to be adapted to improve efficiency and reduce carbon pollution. And with severe weather events becoming more frequent and more intense, homes need to be hardened to withstand these increasing hazards. The report found climate change-driven disasters caused $57 billion of damage to 14.5 million homes in 2021.
Possible solutions
Ultimately, the report shows that the nation simply has too few homes, and current market and policy conditions aren’t likely to create either the number or the variety of homes that are needed.
“The thing we can’t lose sight of is that it’s too bloody expensive to build housing,” Herbert said.
That’s driven builders to prioritize luxury apartments and houses that only the wealthy can afford. High interest rates and banks’ more cautious lending are making it even harder to get financing, Herbert and other panelists said.
Many workers left the labor force during the Great Recession when homebuilding jobs disappeared and never came back. The skilled trades workforce will be depleted as more and more people retire. And historically low immigration rates in recent years has deprived the construction industry of a once-reliable source of new workers.
But there are solutions: Innovation in the way homes are built must be mainstreamed, Herbert said, like using modular homebuilding and 3-D printing. Innovations in financing are also needed, especially to preserve existing housing stock and encourage a broader array of housing types to meet current and future needs. More and varied government funding, changes in land use policy and reduced red tape should also drive down production costs and timelines.
“People often say, what's the silver bullet in housing? We need silver buckshot, and we have to say yes and to all the things that we need to do and we need to be persistent,” Herbert said.
(You can read the full report and view interactives here)
Got a tip? Christopher Connelly is KERA's One Crisis Away Reporter, exploring life on the financial edge. Email Christopher atcconnelly@kera.org.You can follow Christopher on Twitter @hithisischris.
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