Housing the American Dream: An Analysis of the Housing
Shortage in the United State
John E. Rent
Virginia High School
During the early 1900s, the Slavic states of the Balkan
Peninsula were suffering from a severe housing and land shortage. What
little land was available was either too mountainous for settlement or
so expensive it could only be purchased by the aristocracy. With little
hope of earning a livelihood or attaining a home, my great grandfather,
Anton Rent, left his native Slovenia and immigrated to the United States.
Moving to Minnesota, he took full advantage of the Homestead Act of 1860,
which offered free land and a chance for a prosperous future to anyone
willing to work hard for itthe "American Dream." With
$135 and an unbreakable spirit, Anton built a hand-hewed log home complete
with glass windows, satisfied the homestead requirements and thrived there
Compared to Slovenia, the United States really was a housing
heaven. With carefully implemented government assistance, America's housing
supply survived the dark years of the Great Depression, grew robustly
throughout the World War II era, and triumphed into the modem age. In
1970, there were 6.5 million low-cost rental units in the United States.
That was roughly 300,000 greater than the number of low-income renters
(Center on Budget and Policy Priorities). As late as 1982, the
President's Commission on Housing stated, "Americans today are the
best-housed people in history" (Davis 11).
In the late 1990s, the NASDAQ market ballooned with ripe Internet stocks
and the Dow Jones Industrial Average shattered the 10,000 mark. Simultaneously,
the number of low-income renters in America increased almost 70 percent
from 1970, while the number of affordable housing units actually fell
(Center on Budget and Policy Priorities). Who could have guessed
that while America was experiencing an economic upswing unprecedented
in history, the nation would plunge into a housing crisis unlike anything
it had seen in a century?
Today, according to the Coalition for the Homeless, there
may be as many as 3 million homeless nationally, due primarily to a shortage
of affordable housing (Davis 15). Thus, when Americans are confronted
with the question, "Is the United States experiencing a housing shortage?"
they must answer with a definite "yes." Ironically, America's
housing shortage has been caused, in large part, by the prosperity of
our nation's overall economy. Fortunately, the crisis can be stemmed with
the correct balance of government intervention and free-market capitalism.
British poet Barnabe Googe first coined the phrase, "out
of sight, out of mind," in the late 16th century but, it is still
very relevant when applied to the American public's view of its housing
shortage. Consider the words of Andrew Cuomo, the former Cabinet secretary
of the Department of Housing and Urban Development: "Most of the
emphasis today is on the feel-good. People don't want to focus on [the
homeless], but there is always the sense that the problem is apparently
getting better" (Ratnesar 39). Unfortunately, the more
America ignores its inadequate housing situation, the worse the problem
actually becomes. According to the U.S. Conference of Mayors, demand for
low-income housing has increased every year since 1985, including a monumental
11 percent jump in the last years of the 1990s (Ratnesar 39). Exactly
how serious is the current housing shortage? A recent survey conducted
by the National Low-Income Housing Coalition concluded that most states
needed two, three or even four times as many low-income housing units
than were available (Amidei 101). The question remains: What has
caused the housing shortage? What has led America from housing surpluses
in the 1970s to the severe shortage today?
The answer lies in our own economic prosperity. During the
relatively placid economic years of the '50s, '60s and '70s, the housing
economy of the United States was able to meet the needs of low-income
renters through a process called filtering. Filtering occurs when prospering
individuals or families purchase new housing, larger and more expensive
than their previous homes. The housing left behind then becomes available
for other families to move up from their less desirable housing. That
housing in turn is again made available for market at a rate that would
likely be affordable to very low-income families. In theory, the principle
of filtering would provide a steady stream of low-income housing to meet
the needs of America (Davis 26). However, as the American economy
began its meteoric rise in the '80s, housing costs around the nation,
including the cost of low-income housing, began to skyrocket. In some
cases, filtering even began to function in reverse. In a process known
as gentrification, old, urban, and often low-income housing is purchased
by affluent companies and city dwellers that remodel and modernize the
housing. As a result, these housing units become far from affordable.
Take, for example, the plight of the housing market in the technology
(and money) rich Silicon Valley in California. In urban areas, especially
San Francisco and Los Angeles, when the financially flush Internet companies
moved in throughout the '90s, renters had to move out. During 2000, the
average rent in the Silicon Valley went up 400 percent, and the average
price of a home grew to $465,400, up nearly 30 percent (Taylor 29).
Angry tenants say they have been "e-victed."
With such an overwhelming housing crisis, Americans must
ask themselves what role their government should play in the solution.
Of course, the government has a wide range of options. It could adopt
a complete laissez-faire policy, believing that eventually the supply
and demand curves will settle to an affordable equilibrium price. The
other end of the spectrum could involve complete government intervention,
with rent ceilings, price controls and a massive bureaucracy to back it
A governmental "hands-off policy" would force
America's low-income families into an untenable position, waiting for
equilibrium to establish itself in an often-unpredictable free market
economy. Conversely, too much government intervention has proved to be
counterproductive and ultimately destructive. Each year millions of dollars
from HUD's budget are spent on "urban-renewal," a process of
metropolitan beautification that supposedly increases the appeal of large
cities. Although urban renewal is an admirable goal, most of the time
the government's idea of renewal involves the complete demolition of thousands
of low-income housing units, which are termed "eyesores." Replacement
housing, most of it too pricey for the poor, is inadequate. Much of the
"renewed" land is used to expand colleges, hospitals and other
"beautiful" institutions, leaving thousands of displaced families
in the wake of government-sponsored gentrification (Whitman 28).
According to Nancy Merrill, office manager from HUD's Minnesota
Housing Authority, government money must be funneled more directly to
existing public housing and voucher programs. Merrill states that public
housing consists of government-owned apartments with rents geared to be
less than 30 percent of a tenant's income. Under HUD's Section 8 regulations,
low-income families can also rent privately owned apartments and receive
government subsidies for much of the rent (Merrill interview).
A balance of targeted government intervention and economic stimulus would
reestablish the natural filtering process in America's housing market.
If America's homeless and disadvantaged can be made more upwardly mobile
by addressing the causes of their economic condition, and if adequate
low-income housing can be made available, the housing crisis can be resolved.
The "American Dream" will once more be attainable for those
willing to work for it.
Amidei, Nancy. "A Needless Shortage." Commonweal 28 Feb 1986:
Center on Budget and Policy Priorities. "In Search
of Shelter: The Growing Shortage of Affordable Rental Housing." (no
Davis, Bertha. America's Housing Crisis. New York:
Franklin Watts, 1990.
Merrill, Nancy. Interviewed by John Rent. 12 March 2002.
Ratnesar, Romesh. "Not Gone, but Forgotten?" Time
8 Feb. 1999: 31.
Taylor, Chris. "When Dotcoms Move In." Time
28 Aug. 2000: 29.
Whitman, David. "Raising Hopes by Razing High-rises."
U.S. News and World Report 21 Feb. 2000: 28.