With the economy a top priority for voters heading to the polls, Vice President Kamala Harris and former President Donald Trump have recognized the harm inflated prices for housing can inflict on Americans.

Unlike groceries or gas, mortgage and rent are fixed costs. A hike in rent or a mortgage payment that forces households to spend more than 30% of their income can bust budgets. The inflated cost of housing has pushed the median home value up to about $395,000 in Atlanta, according to the most recent data from tech real estate firm Zillow, and the rent for a median two-bedroom is about $2,100.

It’s a vicious cycle, with the high cost of rent and home prices putting a big dent in any plans low- or middle-income earners might have to own a home. According to housing policy experts, the crisis is putting more and more people at risk of homelessness.

How did we get here?

Though high rents, home prices, and borrowing costs can make the housing crisis seem like a recent problem, it’s been a slow burner, worsened by the twin shocks of the financial crisis and a pandemic. The short answer: there are not enough homes to meet demand.

The aftermath of the financial crisis of 2007 and 2008 began the slide into a massive housing deficit. At their peak in 2005, builders constructed more than 2 million homes, according to U.S. Census data. In the years after the crisis, when there were a glut of homes for sale in the market, construction shrunk to a low of around 550,000 housing starts in 2009.

Construction steadily grew in the intervening years, reaching 1.6 million in 2021, but the lag means there were still too few houses to keep up with population growth, according to Janneke Ratcliffe, vice president of housing finance policy at the Urban Institute.

The metro Atlanta region saw a sharp drop in construction during the financial crisis, the think tank Bipartisan Policy Center said in a 2023 report. By 2021, the market was tens of thousands of homes short of where it needed to be to meet demand, according to a 2023 report sponsored by the National Association of Realtors, “Housing Underproduction in the U.S.”

Decades-long wage stagnation could be another factor in pushing homes out of reach, with the median home price outpacing median wage growth. In September, real estate brokerage firm Redfin found the household income needed to afford the median home sale price in metro Atlanta is more than $105,000.

But the median household income in Atlanta was about $85,000 in 2022, according to a U.S. Census report.

Metro Atlanta is one of the fastest-growing regions in the nation, and it added around 67,000 residents between April 2022 and April 2023. Real estate brokerage firm Redfin’s chief economist, Daryl Fairweather, said migration has played a part with people abandoning other parts of the country where housing is scarce and unaffordable to move to Atlanta.

“People could take their New York City salaries and come down to Atlanta and buy housing, essentially doing arbitrage — taking their salaries and buying cheaper goods. That caused prices to go up very quickly, because everybody was doing that at the same time, and construction cannot keep up,” she said.

The pandemic poured accelerant onto the fire, making a bad situation worse. Snarls in the supply chain resulted in higher construction costs and it has become more expensive to build affordable housing. To tame inflation, interest rates shot up from a pandemic low of around 3% to more than 7%. In recent years, home prices and rents have soared. In addition, historically low interest rates seen at the start of the pandemic created “golden handcuffs,” where homeowners with a 3% interest rate or less are reluctant to upscale or downsize.

These homeowners, whether empty nesters, retirees, or growing families, are staying in homes that might otherwise go to the next generation of millennial and Gen-Z homebuyers.

Where Harris and Trump stand on housing affordability

Credit: Charlie Neibergall/AP

Credit: Charlie Neibergall/AP

Harris

If elected, Harris says she will build 3 million new homes in her first term and offer $25,000 in down payment assistance to first-time homebuyers. She says her administration will take on corporate landlords and investors choking the supply of homes, and “cut red tape” by “streamlining permitting processes and reviews,” according to the campaign.

The plan includes tax incentives for building starter homes and a $40 billion innovation fund for new housing that encourages developers to come up with novel ideas to design, build, and finance new housing.

In May, mortgage buyer Freddie Mac said the U.S. would need to add 1.5 million vacant for-sale and for-rent homes to make up the shortage.

Still, estimates vary on how many homes are needed. In November 2023, The Pew Research Center published an article stating that some housing policy experts believe the deficit is 4-7 million homes. However, some housing policy and construction industry experts have questioned whether building as many as 3 million homes in four years is realistic.

The Urban Institute’s Ratcliffe said Harris’ goals were appropriate because of the severity of the shortage. All the same, she would like to see a Harris administration offer more financial relief to renters, too.

Rep. Kasey Carpenter, a Dalton Republican, and lead sponsor of a bill passed earlier this year to protect Georgia renters called the Safe at Home Act, said supply and demand is still the most pressing issue.

“While it may sound good that you’re going to offer somebody $25,000 … taxpayers are paying for that,” he told the AJC in August. “I don’t know in the long run if that’s a good policy.”

He wants local, state and federal lawmakers to change regulations to make it easier to build homes.

“Adding a bunch of different programs doesn’t solve the problem. You’ve got to figure out a way to make it cheaper to build houses. The only way I see to do that is to change the regulation around the industry,” he said.

Harris has said she will take on corporate landlords and has talked about cracking down on technology companies that are raising rents. These are major issues in Atlanta, with an AJC Investigation, American Dream For Rent, describing the metro Atlanta region as “ground zero” for investor ownership of single-family rental homes.

Earlier this year, Wall Street watchdog the Private Equity Stakeholder Project found Georgia most at risk from hedge fund investment in rental homes.

Predatory investing is not the “root cause” of the crisis nationwide, according to Fairweather, but she added that it is still a big deal in the Atlanta region.

“Atlanta is a place where investors like to come in and buy cheap properties, knowing that this population and demand is going to increase,” she said.

Credit: TNS

Credit: TNS

Trump

Trump’s policy proposals are short on detail but share some similarities. His campaign has seized on housing as a campaign issue, betting that many voters will blame Biden and Harris for the crisis.

In a recent campaign mailer sent to DeKalb County voters, the Georgia Republican Party focused exclusively on housing, claiming that during his first term, Trump made it “affordable to buy a home” and that, under Biden and Harris, “homeownership is out of reach.”

Trump has talked about building more single-family homes, but in a nod toward the “not in my backyard” movement he has said he opposes affordable multifamily housing in the suburbs. In May, when Biden was still in the race, Trump said his opponent wanted to “abolish” and “destroy” the suburbs by building “ultradense housing projects in beautiful residential neighborhoods.”

His campaign says he will build more homes by “slashing inflation,” without specifics as to how he would do that, and cutting federal regulations to halve the cost of building a home. Like Harris, he has said he will open up federal land for more construction. He has also blamed the housing crisis on immigration.

“President Trump’s commitment to stop the border invasion will reverse the negative impact that the flood of 20 million illegal aliens has had on driving up housing costs,” the Trump campaign said in an emailed statement to the AJC.

People in the country without legal permission make up only 3% of the population. And Fairweather doesn’t believe blaming them is credible, much less the right way to tackle a housing shortage.

“Population is something that determines demand for housing, but I don’t think that doing population control is the way to do housing policy. Housing policy should be about increasing the supply of housing, not about depressing demand,” she said.

For all the candidates’ focus on homeownership, Taylor Shelton, a housing expert and associate professor in the Department of Geosciences at Georgia State University, said he would like to have seen more protections for renters. He wants to see a federal tenants’ Bill of Rights passed to make it harder for landlords to mistreat and evict tenants.

This will strike a chord in a state that has historically been behind the curve when it comes to protecting tenants’ rights. The Safe At Home Act provides only modest protections, and it is unclear if it will curb unethical landlords’ worst impulses.

“I don’t want to say that building new homes is not important,” Shelton said. “But there are also a whole lot of places where vacancy remains high because those homes are either owned by speculators or by large corporations.”