The Housing Crisis: A Community Issue
Affordable housing is one of those phrases that is often seen as a problem for families earning low incomes, however, all Missourians have felt the impacts of the housing crisis. In 2024, Missouri experienced the largest rent increase in the country, and the cost of homeownership continued to rise. Higher spending on housing means decreased spending in other areas, such as groceries. Three-fourths of households making $75,000 or less report that they have cut back on grocery spending to pay their rent. Decreased spending is also reported on medical care, prescriptions, and transportation costs. Half of renters struggling with housing costs feel pressured to move somewhere more affordable, but 80% of them stay where they are because they cannot find something more affordable.
The housing crisis is not only a problem for families—it’s an economic challenge, affecting job growth and business stability as employers struggle to find workers that can afford to live nearby. And while it might seem easy to blame this problem on the workers, the truth of the matter is the current housing crisis has a clear systemic root cause– decades of decreased housing construction.
According to data from the Federal Reserve Bank of St. Louis, new home builds (tracked on a monthly basis) had been on the rise throughout the 90s and the early 2000s, more than doubling over 15 years. This trend peaked in January 2006 with more than 2.2M new housing units started that month. This number then declined very sharply, hitting a low of just 478,000 in April 2009. New construction is slowly rebounding, with the total number of new builds as of December 2024 reaching 1.5M, but obviously still substantially behind the 2006 peak. Today, it is estimated that the US housing market is short at least 6.5 million homes. According to CNN, the gap between single-family housing starts and household formations grew from 5.5 million at the end of 2021 to 6.5 million at the end of 2022 as household formations rose and single-family home construction dropped.
As The National Association of Realtors Housing Shortage Tracker shows, a shortage of affordable housing impacts every area of our economy. Previously, for every two new jobs created in a city, one permit was issued for new housing construction. However, in Missouri’s four metropolitan areas (St. Louis, Columbia, Kansas City, and Springfield), we saw this decrease to an average of one permit for new construction for every 4.5 jobs created. Lack of accessible and affordable housing impacts a community’s economic growth as employers struggle to hire and retain skilled workers who are looking at jobs in communities with lower housing costs and shorter commutes. Economic growth is impacted as new employers avoid areas with significant housing shortages due to the impact it has on attracting new workers. Local businesses also lose out as economic growth stalls, leading to decreased spending in these communities.
The housing market that has been hit the hardest is in the construction of “starter homes” – entry level, single family homes that are smaller than 1400 square feet and often more affordable for working class households. Starter home construction reached its peak in 2004 – 12.1% of all single family home construction that year; in 2023, it was only 8.7% of single family home construction. This leads to more people feeling as if homeownership is out of reach – a 2024 survey revealed that 70% of all Americans feel that it is unrealistic to buy a home in the current market. 87% of Gen Z and 62% of Millennials report that they cannot afford to buy a home. The American dream of homeownership has been replaced with the fear of eviction and homelessness. These fears are not without merit– homelessness increased 18% in 2024 – mostly attributed to a lack of access to housing that is affordable.
Less homeowners means more renters. Less housing available to rent means higher prices. As a result, more households are feeling the strain. Middle-income families paying more to secure housing that would have typically gone to low-income families, pricing more and more families earning low incomes out of the housing market, or forcing them to rent substandard housing.
In order to solve this problem, we have to understand the complex economic, workforce, and policy issues that got us to where we are today. Stay tuned next month for the next piece in our series, which will break down the root causes of the housing crisis.
English 
Spanish