How We Built the Housing Crisis (And Why We Can Dismantle It)

Meet the numbers that define modern American life: The median gross rent (rent plus the cost of utilities) in the United States hit $1,487 in 2024, according to Census Bureau data. Meanwhile, the median household income stands at $80,610 as of 2023, representing minimal real growth over the past two decades despite dramatic increases in housing costs, based on Census Bureau reporting.

Since 2020 alone, home prices and rents have surged 47 and 26%, respectively, nationwide, according to the Harvard Joint Center for Housing Studies. At the same time, the Economic Policy Institute notes that median wages grew just 6% total between 1979 and 2013—less than two-tenths of 1% per year.

The combination of comparatively depressed wages and rising housing prices—not to mention other ancillary costs—has profound implications for American families and the country more broadly. Put simply, nearly half of American renters—21 million households—now spend more than 30% of their income just to keep a roof over their heads.

This isn’t happening by accident, either.

The housing affordability crisis stems from deliberate policy choices made over decades—choices that prioritized property values over human needs, investment returns over stable communities, and the wealth of homeowners over the survival of renters.

The housing crisis has become even more dystopian in recent years as private equity and other investors have begun buying up traditional starter homes, turning them into rental assets. To be sure, in the first quarter of 2025, about 27% of all homes sold in the U.S. were purchased by investors, the AP reported.

Understanding why rent is unaffordable everywhere requires looking past the comfortable myths about supply and demand to examine who benefits from this system and how they’ve rigged it to extract maximum profit from our basic need for shelter.

The Scope of the Housing Crisis

Before we dig into causes, let’s be clear about the scale of the problem.

The Harvard Joint Center for Housing Studies reported that in 2022, a record 22.4 million renter households were “cost-burdened,” meaning they spent more than 30% of their income on housing and utilities. That’s 50% of all renters in America—the highest share ever recorded.

The crisis hits hardest along lines of race and class. 2023 Census Bureau data showed that Hispanic households experienced cost burdens at a rate of 53%, and Native Hawaiian or Pacific Islander households at 52%, with Black households also facing disproportionate burdens.

For renters earning less than $30,000 annually—and remember, that’s roughly a $15 hourly wage—the Harvard researchers found they had a median of just $310 left each month after paying rent. In theory, that’s supposed to cover food, transportation, healthcare, childcare, and everything else that makes life possible.

That’s life for many individuals and their families. The Economic Policy Institute estimates that even in the most affordable American counties, a single-person household needs around $2,000 monthly for non-housing necessities.

Low-income renters aren’t just cost-burdened—they’re being forced to choose between rent and literally everything else that sustains human life.

This isn’t some abstract policy problem. Behind every one of these statistics is a person making impossible choices: skipping medication to make rent or skipping breakfast to keep the lights on. The homelessness count hit a record 771,480 people in 2024, a figure that represents real human suffering at a scale we should find absolutely unconscionable in the wealthiest country in human history.

Wage Stagnation

Let’s start with the simplest explanation for why housing costs have become unbearable: wages haven’t kept pace with housing cost.

The Economic Policy Institute documents that between 1979 and 2013, the hourly wages of median workers rose just 6% in total over 34 years. That’s less than two-tenths of 1% annual growth. Low-wage workers fared even worse, seeing their wages actually fall 5% during this same period. Meanwhile, high-wage workers saw their pay increase by 41%.

This wasn’t natural economic evolution. Decades of attacks on unions, the refusal to raise the federal minimum wage (including to keep up with inflation), the classification of more and more workers as “contractors” to avoid benefits and protections, the prioritization of shareholder value over worker compensation—all of these were choices made by policymakers and corporate executives.

The result has been the greatest upward transfer of wealth in American history, spawning massive levels of income inequality.

Now layer housing costs on top of wage stagnation. Since 2020 alone, home prices have increased 47% while rents have climbed 26% nationwide. These increases happened during a period when median household income grew, but not nearly enough to keep pace. After adjusting for inflation, real median household income in 2024 sits at roughly the same level it was at the turn of the millennium.

A generation ago, the rule of thumb was that you could afford rent if it didn’t exceed 30% of your income. Today, that threshold has become a cruel joke for millions of Americans. When wages stagnate while housing costs explode, the inevitable result is that housing consumes an ever-larger share of household budgets, leaving less for food, healthcare, childcare, education, transportation, and savings.

This isn’t just making people poorer in the present—it’s hurting their ability to build wealth for the future.

The wage-housing disconnect reveals something crucial about how our economy actually functions. Productivity has increased dramatically over the past 40 years, but workers haven’t seen the benefits. Corporate profits have soared, but workers’ share of those profits has shrunk. The wealth has been captured at the top through deliberate policy choices, while workers have been told to make do with less, even as the cost of necessities like housing has become prohibitive.

Private equity firms purchase properties, then maximize short-term profits by cutting maintenance spending and raising rents as aggressively as possible. Once they’ve inflated the income stream, they flip the properties to new buyers at a premium, typically within just a few years.

Zoning: The Invisible Wall Keeping You Out

In most American cities, it is illegal to build anything other than single-family detached homes on roughly 75% of residential land. No duplexes. No townhomes. No small apartment buildings. These restrictions aren’t some neutral planning tool—they’re the descendants of explicitly racist policies designed to keep Black families, immigrants, and poor people out of white neighborhoods.

The U.S. Supreme Court laid the groundwork for this system in 1926 with the Euclid v. Ambler decision, which established that cities could legally ban apartment buildings from certain neighborhoods.

Justice George Sutherland, writing for the majority, referred to apartment complexes as “mere parasites” on neighborhoods. Once the Court gave cities this power, single-family zoning spread rapidly as a way to maintain segregation after the court struck down explicitly race-based zoning laws in 1917.

The result has been the artificial restriction of housing supply in precisely the places where people most want and need to live—near jobs, good schools, and public transit.

Cities across California, for instance, have almost 75% of all developable land zoned exclusively for single-family homes, according to the Center for American Progress.

The pattern repeats across expensive coastal cities such as San Francisco and increasingly in inland metros. A 2019 analysis by The New York Times looked at 11 U.S. cities and suburbs and found that in most of them, three-quarters or more of residential land is zoned to allow only detached, single-family homes.

This creates massive artificial scarcity. The Urban Institute reports a shortage of 3.8 million houses for rent or sale as of 2019, and the gap has since only widened.

We simply haven’t built enough housing to meet population growth and household formation. But this shortage isn’t the result of physical constraints or lack of land—it’s the result of zoning laws that make it illegal to build the housing we need.

While defenders of single-family zoning hide behind euphemisms about “neighborhood character” and “maintaining property values,” critics of such policies see it more akin to economic segregation enforced through law.

In addition, research from the National Association of Housing and Redevelopment Officials confirms that such zoning policies “restrict areas of opportunity with high quality schools, public services, and proximity to jobs to those that can afford it.” Perhaps not surprising, it notes that “exclusionary zoning practices are associated with higher housing costs and racial segregation, exacerbating the racial wealth gap.”

The good news is that some cities and states have begun to recognize this and reform their zoning codes.

Minneapolis eliminated single-family zoning citywide in 2019, allowing duplexes and triplexes in every neighborhood. The city built significantly more housing than comparable cities, and rents rose just 1% between 2017 and 2022 while they increased 14% in the rest of Minnesota.

Oregon, California, and Maine have all ended single-family zoning statewide in recent years.

But these reforms face fierce opposition from homeowners who benefit from artificial scarcity. Every new housing unit represents competition that might slightly reduce their property values. Opponents of greater housing concentration are often among the most vocal, appearing at zoning meetings and voicing concerns about parking, traffic and other purported issues.

The forces against new builds have been broadly labeled as “NIMBYs” (Not In My Backyard advocates). To be sure, their vocal opposition has led to municipalities blocking housing construction for decades.

When Private Equity Becomes Your Landlord

The third major driver of the housing crisis is the financialization of housing—the transformation of homes from places where people live into assets that generate returns for investors. This shift accelerated dramatically after the 2008 financial crisis, when private equity firms saw an opportunity in the wreckage of the foreclosure fallout.

The private equity firm Blackstone (not to be confused with BlackRock) essentially invented the modern corporate landlord model in 2012, buying up foreclosed single-family homes at discount prices through its subsidiary Invitation Homes.

Other firms quickly followed. Today, the Private Equity Stakeholder Project has identified more than 5,000 apartment complexes owned by more than 30 private equity companies, totaling almost 1.4 million units. That accounts for 6% of the nation’s 23 million apartment units.

For single-family homes, private equity firms and other institutional investors owned about 2% of rental properties as of recent counts, but projections from MetLife Investment Management suggest they could control 40% of single-family rentals by 2030. These numbers might sound small at the national level, but in specific markets, corporate landlords have concentrated ownership far more heavily. In some neighborhoods, institutional investors control 20 to 43% of single-family homes.

Think of it as profits through extraction. Private equity firms purchase properties, then maximize short-term profits by cutting maintenance spending and raising rents as aggressively as possible. Once they’ve inflated the income stream, they flip the properties to new buyers at a premium, typically within just a few years.

When private equity takes over human essentials, such as housing or healthcare, the results can be catastrophic.

Research from Americans for Financial Reform, a nonprofit made up of a diverse coalition of partners, found a consistent pattern of exploitative practices by private equity landlords: jacking up rents far beyond what market conditions justify, adding new charges and fees to boost revenue, deferring essential repairs and maintenance to cut costs, and taking tenants to court more frequently than traditional landlords. They reported “record-breaking results” during the pandemic while millions of Americans struggled to make rent.

The impact on prices has been substantial. In 2024, Rep. Pat Ryan (D-NY) wrote a letter to then-Federal Trade Commission (FTC) Chair Lina Khan about how, compared to four years earlier, private equity influence has contributed to a sharp rise in single-family home prices.

“Private equity is connected to housing, healthcare, jobs, and pensions around the United States, and left unchecked, its influence poses great financial risk to working families,” Ryan wrote. “While raising rental rates and the price of single-family homes, private equity companies can simultaneously lower wages, all in an effort to boost their profits regardless of the impact on our communities.”

This isn’t normal landlording. Mom-and-pop landlords might raise rent periodically, but they’re constrained by personal relationships with tenants and the hassle of finding new renters.

By design, corporate landlords can exercise more control. They use algorithmic pricing software to maximize rent extraction across their portfolio, they’ve streamlined eviction processes to industrial efficiency, and they have no personal stake in community stability. Tenants report reduced services, excessive utility fees, and deferred maintenance as firms squeeze every possible dollar of profit from their properties.

The federal government has actively enabled this corporate takeover. Freddie Mac, the government-sponsored enterprise that helps finance apartment purchases, provided backing for private equity’s largest deals, with firms accounting for 85% of Freddie Mac’s 20 biggest apartment financing deals to single borrowers.

Taxpayers are effectively subsidizing Wall Street’s colonization of the housing market.

International Proof: Housing as a Human Right Works

The housing affordability crisis isn’t inevitable, and we don’t need to speculate about alternatives. Countries around the world have demonstrated that treating housing as a human right rather than a commodity produces better outcomes for residents without destroying their economies.

Vienna, Austria, proves it works at scale. The city maintains roughly a quarter of all residential dwellings as social housing, approximately 400,000 units, serving the majority of Vienna’s 1.6 million renters, per a 2025 report from the Climate and Community Institute. These are often high-quality units that are integrated citywide and available to all income levels. Average rents were about $11.36 per square meter in 2023—more than three times lower than in Inner London.

The result? Lowest housing costs of any major European city, consistently ranking as one of the world’s most livable, with far greater income diversity within neighborhoods than comparable American cities. Critics claim it’s unsustainable and stifles markets. Vienna’s been doing this for over a century, and the city’s thriving.

Finland offers another model. Through a comprehensive Housing First approach, Finland reduced long-term homelessness by 68% between 2008 and 2022. Rather than requiring people experiencing homelessness to address mental health or substance use issues before receiving housing, Finland provides housing first, then wraps services around people.

Research shows the program generates cost savings of 15,000 euros per person annually—money previously spent on emergency rooms, jails, and crisis services.

Housing First programs internationally maintain housing retention rates around 80% for those with “high support needs,” demonstrating that when you give people stable housing, they keep it. This isn’t charity—it’s evidence-based policy that works because it treats housing as a human right rather than something people must earn.

Singapore presents a more complex example. The city-state houses 77% of its population in government-built public housing, with homeownership rates around 90%. Singaporeans purchase Housing Development Board apartments using mandatory pension savings, with median price-to-income ratios as low as 1.9% for new subsidized flats. The government has implemented 16 rounds of cooling measures since 2009 to control speculation.

However, resale prices have surged—by 9.6% in 2024—and the system excludes roughly a fifth of the population, foreign workers who face severely substandard housing. The model demonstrates both the possibilities and limitations of large-scale public housing.

These aren’t socialist utopias—they’re functioning capitalist economies that have simply made different policy choices about housing. Austria, Finland, and Singapore all have thriving private sectors, but they’ve recognized that leaving housing entirely to market forces produces terrible outcomes. They’ve chosen to treat housing as infrastructure—something too important to leave solely to profit-seeking entities.

The key lesson from these international examples is that housing abundance and affordability require active government intervention.

Markets left to their own devices produce housing for those who can pay the most, not housing for everyone who needs it. When governments take responsibility for ensuring adequate housing supply through direct construction, strict regulations on speculation, and robust tenant protections, housing becomes affordable and stable. When they abdicate that responsibility to private markets, you get the American housing crisis.

UNFTR’s Take: How We Fix This

Solving the housing affordability crisis requires tackling all three root causes simultaneously. We need policies that boost wages, reform exclusionary zoning, and regulate corporate landlords. Most fundamentally, we need to stop treating housing as primarily an investment vehicle and start treating it as what it actually is: a basic human need.

Start with Housing First as a proven model for addressing homelessness.

Housing First isn’t just housing only—it’s housing first with wraparound services. The evidence is overwhelming: For instance, 85% of the Kensington neighborhood in North Philadelphia maintained housing after five years, exceeding traditional treatment-first approaches. Communities implementing Housing First also see emergency room visits drop by 18%, with a 20% increase in less costly primary care services.

This inherently creates cost savings from reduced emergency services, incarceration, and crisis intervention.

A comprehensive evaluation in New York found average savings of over $10,000 per person annually, while studies in Denver documented savings approaching for supportive housing at $7,000 per person per year. The Department of Veterans Affairs adopted Housing First principles, resulting in a 7.5% decrease in veteran homelessness from 2023 to 2024—the lowest level since measurement began in 2009. It works because it treats housing as the foundation for addressing other challenges, not as a reward for solving those challenges first.

On zoning reform, we need comprehensive changes at the state and local levels to legalize abundant housing construction.

This means ending single-family-only zoning to allow duplexes, triplexes, townhomes, and small apartment buildings in every neighborhood.

• It means eliminating or drastically reducing minimum parking requirements that waste buildable space.
• It means allowing accessory dwelling units—granny flats, garage conversions—on existing lots.
• It means streamlining permitting processes so that legal housing doesn’t take years to approve.

Recent reforms, including laws requiring cities to permit accessory dwelling units, have sparked a construction boom. But reform faces opposition from homeowners defending property values, making sustained political pressure necessary to overcome it.

We must also directly confront the corporate takeover of housing. U.S. Sen. Jeff Merkley’s End Hedge Fund Control of American Homes Act aimed to force large corporate owners to divest from single-family home holdings over 10 years, with substantial penalties for non-compliance.

Advocates for reform think we should go further: ban private equity firms from purchasing single-family homes entirely, regulate rent increases on corporate-owned properties, strengthen tenant organizing rights, and end federal subsidies like Freddie Mac backing for private equity apartment purchases.

Beyond these reforms, there’s been calls for expansion of public and social housing. The United States has essentially abandoned public housing construction since the 1980s, leaving development almost entirely to private markets. Adopting Vienna and Singapore approaches would mean an explosion of affordable housing at scale—not just for the very poorest, but for working and middle-class families who are priced out of market-rate housing.

Public housing doesn’t have to be the disaster it has become during decades of deliberate neglect and underfunding. When properly funded and managed, public housing can be high-quality, well-maintained, and genuinely affordable.

Finally, we need to address wages. No amount of housing construction will solve affordability if workers can’t earn enough to pay for housing. That means raising the minimum wage to match actual living costs, strengthening unions and collective bargaining rights, ending the misclassification of workers as contractors, and broadly rebalancing power between workers and employers.

The housing crisis and the wage crisis are two sides of the same coin—both reflect the prioritization of capital returns over human needs.

This Is a Choice, Not Fate

The housing affordability crisis didn’t happen by accident or through impersonal market forces. It has its roots in specific policy choices made over decades: the choice to let wages stagnate while housing costs soared, the choice to maintain exclusionary zoning that creates artificial scarcity, the choice to allow private equity firms to colonize the housing market.

Every one of these benefited someone—property owners whose home values inflated, investors extracting profit from basic human needs, and wealthy homeowners in exclusive neighborhoods. But they devastated everyone else.

Understanding the housing crisis as the result of policy choices rather than inevitable economic forces is liberating because it means different choices can produce different outcomes.

• We don’t have to accept that half of all renters should be cost-burdened or that $310 per month should be considered sufficient for everything except rent.
• We don’t have to accept that homelessness should hit record highs in the wealthiest country in history.
• We don’t have to accept that housing should function primarily as an investment vehicle that enriches some while impoverishing others.

Countries around the world have made different choices and achieved different results. Cities in America that have reformed zoning have built more housing and seen rents stabilize. The VA has reduced veteran homelessness through Housing First. We know what works—we’ve just lacked the political will to implement solutions at the scale necessary to match the scale of the crisis.

The housing crisis persists because powerful interests benefit from it and have captured the policymaking process to maintain their advantages. Solving it requires building political power to overcome that resistance. It requires organizing renters and would-be homeowners to fight for their interests as forcefully as NIMBYs and corporate landlords fight for theirs. It requires rejecting the false choice between housing abundance and neighborhood quality, between density and livability.

Most fundamentally, it requires rejecting the premise that housing should primarily serve as a vehicle for wealth accumulation rather than as shelter—the basic human need that makes all other aspects of life possible, which is why Housing First is one of UNFTR’s 5 Non-Negotiables.

The rent is unaffordable everywhere because we’ve allowed it to become unaffordable. We can make different choices. The question is whether we’ll build the political will to do so.

Image Source

• Thomas Hawk “Housing is a Human Right” Flickr, 4 November, 2023. CC BY 2.0. Changes were made.