There is strong evidence that the United States is facing a massive housing crisis that will trigger a destructive political upheaval.
The cause of the problem is simple; the market is not meeting America’s demand for housing. That is driving up rents and house prices, and pitting Americans against each other. The nation’s current housing index cannot meet current demands, and the situation might get worse.
“We’re currently dealing with ‘1994-level’ inventory, despite having 63 million more people in the country,” Zillow Chief Economist Svenja Gudell said of American housing on CNBC’s On the Money last month. The United States had a population of 264.1 million people back in 1994 – today it has a population of 322.762 million.
The Housing Shortage will Ignite Generational Warfare
Get the picture, America might have a shortage of several million homes or more. The situation is worse in fast-growing areas like Denver, Seattle, and Silicon Valley where lower-income housing is simply not being built.
Gudell blamed high construction costs which it unprofitable to build lower-cost housing for part of the problems. The National Association of Realtors noted that sales of homes costing less than $250,000 have fallen in recent months which might indicate a shortage.
The social effects of this will include a multigenerational battle between Baby Boomers that want to keep their real estate battles high and younger Americans that need a place to live. There are currently 83.1 million millennials; people under 35, and 75.4 million Boomers, persons over 52. Gudell thinks the two generations are on a collision course.
“What it comes down to is we have two very large generations kind of butting heads,” Gudell said. “…You have millennials that are just entering the market, that are even larger of a generation than the baby boomers, and you really just need more homes.”
The Housing Shortage will become a Political Issue
The housing shortage is likely to become an issue that will reshape the political landscape. That’s already happened in the United Kingdom, where observers think far-left Labour leader Jeremy Corbyn will become Prime Minister in the near future.
Much of Corbyn’s popularity comes from his focus on housing. At the Labour Party Conference in Brighton on 27 September, Corbyn spent much an important speech discussing housing, The Guardian reported. Corbyn is capitalizing on a British housing crisis that is worse than the one in the United States.
Corbyn promised that housing will be a “Labour priority” and mentioned such radical measures as rent controls, limits on new construction. The well-known socialist even mentioned some very radical solutions including the seizure of undeveloped private land for new housing projects.
The American Corbyn is Coming
“We also need to tax undeveloped land held by developers and have the power to compulsorily purchase,” Corbyn said, “as Ed Miliband said: use it or lose it. Families need homes. No social cleansing. No jacking up rents. No exorbitant ground rents.”
Corbyn’s success is likely to be noticed and copied by American politicians; especially if he actually reaches 10 Downing Street. Expect to see some American politician follow in Corbyn’s footsteps and start offering radical solutions for the “housing crisis”
Most of the upheaval will be on the local and state levels, but similar sentiments are sure to influence the national debate some point. Expect to see many American politicians follow Corbyn’s example of bashing real estate developers and blaming them for the housing crisis.
Unless private enterprise comes up with solutions for the housing crisis soon, expect an American Corbyn to appear and start promising radical solutions. Those solutions will be popular and a lot of businesspeople and capitalists will not like them.