Key points:
- Young Americans struggle with affordability of homeownership due to rising costs.
- Exclusionary zoning laws and the Great Recession have contributed to the housing crisis.
- Inflation and interest rate spikes have worsened the crisis, stifling young professionals’ mobility.
If you want a measure of how the American economy is doing, here’s a deceptively simple one: Can a 30-year-old with a full-time job afford a home?
For millions of Americans today, the answer is a resounding no. Homeownership—a once attainable marker of middle-class stability—is slipping out of reach for an entire generation.
And the damage isn’t just economic. It’s psychological, cultural, and political.
Derek Thompson, in a powerful essay originally published on his site and informed by his work on Abundance, calls today’s housing market “a total disaster” for young people.
He’s right, and the deeper you dig, the more you realize this is not one crisis, but three, nested within each other like Russian dolls: 50 years of exclusionary zoning and broken local politics, 20 years of homebuilding paralysis following the Great Recession, and 5 years of inflation, interest rate spikes, and COVID-era distortions that supercharged the problem.
Start with the 50-year story. Beginning in the 1970s, American cities turned increasingly against growth. Local governments passed restrictive zoning laws, instituted minimum lot sizes and parking mandates, and empowered neighbors to say no to just about everything. These exclusionary policies weren’t just technocratic mistakes. They were often racially and economically motivated, designed to keep low-income families—especially families of color—out of higher-opportunity neighborhoods.
As legal scholar Richard Rothstein and others have chronicled, the architecture of segregation is embedded in these land use decisions. The result? Housing supply plummeted just as urban populations grew.
Then came the 20-year wound left by the Great Recession. The 2008 housing crash obliterated construction firms across the country. Tens of thousands of small builders never recovered. Through most of the 2010s, the U.S. built fewer homes per capita than in any decade since World War II. By the time Millennials reached home-buying age, inventory was scarce, and prices were already soaring.
The last five years have pushed this broken system into outright dysfunction. COVID ignited a demand shock as millions of Americans reassessed their living situations and fled dense cities for suburban homes. At the same time, supply chains broke down, building slowed, and inflation surged. Then the Federal Reserve hiked interest rates to combat that inflation, and suddenly the monthly mortgage payment for a median-priced home doubled.
Now, home prices are high, interest rates are punishing, and existing homeowners are staying put—locked into 2.5% mortgages they’re not about to give up. In 2025, we find ourselves with the highest median age for first-time homebuyers in history: 38. That used to be the median age of all homebuyers.
Young people are right to feel angry. They’re not just imagining this crisis but instead they’re living it. What used to be the decade of ownership—your 30s—has become the decade of frustration, of watching Zillow listings climb out of reach, of staying in overpriced rentals, of giving up on the idea of a backyard and settling for a couch in someone else’s living room.
And it’s not just about dreams deferred—it’s about economic gravity failing to function. A system where people with good jobs cannot afford a place to live is a system out of balance. When young professionals earning solid middle-class incomes can’t break into the housing market, it signals a fundamental failure in how we allocate opportunity.
Housing isn’t just shelter—it’s the foundation of wealth-building in America.
Without access to ownership, people can’t build equity, start families with stability, or stay rooted in their communities. The ripple effects touch everything from family formation to civic participation to retirement security.
If we lock out the very people who should be anchoring the next generation of the middle class—teachers, nurses, engineers, union tradespeople—we’re not just stifling individual mobility. We’re hollowing out the foundation of our economic and democratic life. And eventually, that disillusionment becomes political.
The consequences are far-reaching.
Declining homeownership is linked to delayed family formation, lower fertility rates, declining geographic mobility, and a loss of intergenerational wealth-building. But the political ramifications may be just as important. For decades, housing wasn’t even a top-ten issue in national polling.
Now, for voters under 40, it’s rapidly approaching the top five. These voters aren’t abstractly concerned about “the economy.” They’re concretely furious about rent, mortgages, and the impossibility of moving out of their parents’ homes.
There is, at last, some reason for hope. California—long a poster child for housing dysfunction—has taken major steps to reform its environmental review law (CEQA) to make way for more housing.
New York, under pressure from grassroots groups like Housing Justice for All and pro-housing progressives like Zohran Mamdani, is beginning to reckon with its own barriers. Even presidential candidates are paying attention. Kamala Harris’ most effective ad in the 2024 campaign, according to pollster David Shor, was her promise to reduce housing costs by building more homes.
But the federal government needs to do more.
Thompson proposes a “YIMBY Carrot” strategy—rewarding states and cities that permit more housing with real federal infrastructure and development dollars. It’s a compelling idea. If NIMBYs want to block new neighbors, let them explain to their current neighbors why the community just lost out on money for schools, parks, or transit. Housing policy may be local, but incentives can come from Washington.
Unfortunately, the Trump administration has taken the opposite approach. Instead of investing in housing, Trump has doubled down on scarcity. He’s slapped tariffs on Canadian lumber and Mexican drywall, raising construction costs.
His immigration crackdown chokes the labor supply for homebuilders, who rely heavily on foreign-born workers. His debt policies have rattled bond markets and helped keep long-term interest rates painfully high. If Trump wanted to sabotage the housing market on purpose, it’s hard to imagine a more effective strategy.
This isn’t just about partisanship—heck, we can go down the list of problematic housing policies by both parties and all ideologies.
Instead, we need to focus on priorities.
Some, like Thompson, argue that America needs an abundance agenda—one that sees housing not as a luxury good or a speculative asset, but as a basic building block of middle-class life.
According to this thinking, we must build more homes, faster, in the places people want to live. We must dismantle the barriers that keep cities from growing. And we must stop pretending that the crisis will fix itself if we just wait long enough.
Because it won’t. Not unless we act.
The American Dream doesn’t work without housing. The path to dignity, stability, and opportunity starts with a roof over your head. If we want to rebuild belief in that dream—especially among the young—we’ll need to build something else too: a future they can afford to live in.
From Vanguard article: “Through most of the 2010s, the U.S. built fewer homes per capita than in any decade since World War II.”
And yet, a university study states the following:
“The numbers showed that from 2010 to 2020, household formation did exceed the number of homes available. However, there was a large surplus of housing produced in the previous decade. In fact, from 2000 to 2020, housing production exceeded the growth of households by 3.3 million units. The surplus from 2000 to 2010 more than offset the shortages from 2010 to 2020.”
https://news.ku.edu/news/article/study-finds-us-does-not-have-housing-shortage-but-shortage-of-affordable-housing
From article: “If NIMBYs want to block new neighbors, let them explain to their current neighbors why the community just lost out on money for schools, parks, or transit.”
I’d be happy to explain it, though I don’t consider myself a “NIMBY”:
These things are a “cost”, not a “funding source”. School systems in particular are often too large these days to serve the needs of an existing community, and I believe they are already the #1 recipient of taxes in California.
Additional local parks and transit are not needed, in the absence of growth. As it is, transit systems are struggling (compared to prior years), since ridership is declining (despite the population remaining relatively stable). (Partly as a result of telecommuting.)
Zoning is a very bad joke, as currently constituted. It changes on the whim of the various supervisors and city council people who permit “variances.” Why ask for a zoning change? For one thing, ag land is much less valuable than residential/commercial/industrial land. Ag land costs a few thousand dollars an acre, while the alternative is often 50 – 100 times more. The absolute crookedness of land speculation dominates the Central Valley landscape.
As for more “parks or transit”… low-density zoning (suburbia) makes parks unnecessary, and transit impossible. Robert Cervero’s East Bay observations say transit, and neighborhood commerce require at least 11 dwelling units per acre to provide enough customers to make either one viable, never mind the pedestrian-friendly streets that would make walking to a transit stop possible. Sacramento’s suburban transit comes once every three hours, if then, and rolls around a bunch of empty buses. It’s designed to fail.
Transit is failing everywhere – even in “dense” San Francisco.
Commuter lines “to” job centers (like Sacramento) do work, if it’s subsidized by employers. I should know, as I took a bus to Sacramento for years. (Had to walk several blocks on both ends of the line, but that was acceptable.)
I’m not sure what the current situation is (in regard to state workers and telecommuting), but I did notice a lack of activity in general (in downtown Sacramento) a couple of weeks ago, when I had to go there on a weekday.
It did feel like something out of “The Night of the Living Dead” in the downtown area, and I had one of the few vehicles in what I thought was a reasonably-priced lot – which surprised me. (I actually kind of enjoyed that part, and knew that I wasn’t likely to get door dings either.)
One of the few times I actually “drove” to work was when I lived AND worked in Davis. And I would have done so regardless of public transit or density, since the parking was “free” at that time (for me and other employees, at least).
Personally, I have to be “whacked” (by charging a lot for parking), AND “rewarded” (with free public transit) in order to entice me to dislodge my hands from the steering wheel. (Charlton Heston’s quote comes to mind, regarding his “cold, dead hands” and guns.)
I think I have the same feelings as most “middle class” people – that transit systems are full of dangerous losers (except for commuter lines). There really ought to screen people, like they do at airports. Especially when lines stop in bad neighborhoods (or questionable cities like West Sacramento).
I’m pretty sure that BART used to be safer than it is these days.
Regarding the “dangerous losers” part – I mean it. Personally, I don’t care if those people don’t have any other way to get around, nor do I want to expose myself to assaults and robberies (or just plain old stinky bums who want to harass me for no reason – though there’s plenty of the latter as soon as you get off the bus, anyway). I don’t want those people around me (and that’s yet another reason for the unpopularity of public transit).
San Francisco’s public transit system was (and probably still is) totally out-of-control regarding this, on some lines.
The same thing regarding New York’s subway system.
It never really changes, and the “equity people” (who often don’t take public transit themselves) would no doubt object to some minimal standards/control/surveillance systems. (And yet, those are generally the same people who push public transit for everyone else.)
https://apnews.com/article/new-york-city-subway-national-guard-crime-f046ecaac79601f6113efa8a0c8f25c7
I will say that I feel a whole let LESS safe on public transit, than I do from some terrorist trying to bring down a plane.
Not to belabor the point, but this type of thing is apparently not limited to the U.S., either. Just saw this, yesterday in The Chronicle.
(Note how those arrested are apparently immigrants to Italy. Coincidence?)
https://www.sfchronicle.com/crime/article/sf-teacher-nicholas-pellegrino-attacked-italy-20776385.php
One more for now (from article): “If you want a measure of how the American economy is doing, here’s a deceptively simple one: Can a 30-year-old with a full-time job afford a home?”
I know that I couldn’t, at that time. And yet I’m a “privileged” boomer! (Not sure why I wasn’t “demanding” that society provide me with a house at that time in the “opportunity location” that I would have preferred – or even in “non-opportunity” locations.)
One boomer couple whom I know (who are several years older than I am) didn’t buy a house until they were in their 60s. They moved from a long-term rental apartment in Marin to a small town near Carson City (about 7 years ago), which they were able to do due to the sudden availability of telecommuting.
I thought it was a bad move, but I was proven wrong. Also, the value of their new house immediately started climbing (I think it’s gone down a little, now).
But you know what they DIDN’T do? They didn’t stick around Marin, self-flagellating themselves because they didn’t buy a house decades ago – despite at least one of them having more than sufficient income to do so. They ADJUSTED to the current situation, and came out ahead.
Just as perhaps half the residents in Davis did, when they were priced-out of the Bay Area.
Truth be told, millennials (and subsequent generations) probably hope that the value of their parents’ houses doesn’t tank, as the boomer generation dies off (and the housing market collapses more than it is doing right now).
“Can a 30-year-old with a full-time job afford a home?”
Not for the avergage buyer and it’s been that way for at least 50 years.
I bought my first house in 1978 and it took both my wife’s income and mine. It’s not just the cost of the home, it’s the ever rising cost of maintaining and costs of home ownership like taxes, insurance, etc.
” . . . pro-housing progressives like Zohran Mamdani . . . ”
Progressive housing advocate? I’ve also heard him described as an anti-Jewish bigot and a communist.
Just sayin’ :-|
Still missing: After the New Deal and before the Nixon administration, the feds used to build affordable housing. Nixon put a stop to that, and Reagan cut HUD’s affordable housing budget by 75% as he cut taxes on the wealthy roughly in half, and with his successor raised payroll taxes eightfold. This “housing shortage” (there are more vacant homes than homeless people) is not a deep mystery. It’s the intended effect of public policy decisions generations ago.
Why punish the lower class? The reason is “labor discipline.” That’s the message that you had better take whatever crappy job is on offer, or suffer the indignities of poverty, even homelessness and starvation…and if you rebel, we’ll put you in a cage. It’s the whip in the hand of the plutocrats.
Public housing was, and is a dismal failure (and trapped entire generations of mostly black people in them). You definitely don’t want to be taking public transit that stops anywhere near one of the remaining public housing projects (or walk past them).
Smaller-scale Affordable housing projects don’t seem to cause as many problems, from what I’ve seen.
But every time I’ve seen one of these ugly public housing projects torn down, the city and neighborhood improves. (I’ve often wondered how Marin City continues to exist, but it’s one of the only places in the entirety of Marin county where I avoid going to any of the stores therein – based on direct experience/observation. And yet, it’s probably still better than 99% of other public housing projects.)
I strongly suspect that not ONE of the residents therein has even taken a hike on the beautiful public lands in back of (or near) that housing project. (They would stand out and probably be noticed, if they did so. But they would be safe and welcomed by most people, regardless.) Other than from perhaps Marin snobs, who aren’t friendly toward anyone.
There aren’t very many black hikers / mountain bikers (even middle-class black hikers), from what I’ve noticed over the years.