by Joel Kotkin
Tuesday, 22
February 2022
Analysis
16:00

Joe Biden is making the housing crisis worse

His administration is squeezing Americans out of the property market
by Joel Kotkin
Credit: Getty

As inflation continues to soar in America, few things have become more precious than hard assets like property. And with the stock market as unsteady as our political leadership, big dollars from Wall Street are pouring into real estate, snapping up both multi-family and single-family homes.

Rents are on a wild binge, up near 20% in the past year, while home prices have hit a record high. As people can no longer afford to buy homes, they have been forced into the rental market, driving up prices towards absurd levels in fashionable cities like New York, Los Angeles and San Francisco. Like a pestilence of its own, high rents are spreading to the realm of the “wannabe” places where the “creative class” types are moving to: cities like Miami, Austin, Nashville, and Las Vegas as well as more prosaic places such as Tampa and Memphis. 


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As urbanist Richard Florida has demonstrated, the dynamic of the coastal hubs is spreading out to at least some cities in the interior, hurried along by footloose tech workers who bring with them economic stimulus and higher prices. Consequently, many are looking at a long life as a rental serf, and perhaps a greater delay in their ability, or confidence, to build a family.

For young people, the situation is even more dire. By and large, their only hope is inheritance, the key to what one writer calls ‘the funnel of privilege’, with those in Generation Z are three times as likely as Boomers to count on inheritance for their retirement. Among the youngest cohort, aged 18-22, over 60% see inheritance as their primary source of sustenance as they age.

Yet, President Biden’s administration seems determined to push rent-focused California-style densification across the US. The president’s plans include such things as forcing racial diversity on suburbs, even though 96% of all suburban growth in the last decade was from non-white people. He also has chosen to spend massively on rail, buses and transit rather than on roads, which are used by the vast majority of Americans. One might be inclined to ask why, if transit constitutes less than 1% of passenger travel in the US, does it represent 28% of the funds Biden proposes to spend on transportation? The answer is clear: to make it easier for people to live in deep blue, high density areas. 

Thanks to the Government and companies like BlackRock, where investors accounted for roughly one out of five US homes bought in 2021 — a 50% jump from 2020 — ordinary Americans have been locked out of the housing market. The grand vision embraced by Wall Street, the greens, and the Davos set is a post-ownership “rentership society” where homes, as well as furniture and other necessities, become rentals funnelling endless cash upwards to the oligarchs. This is now the reality of America in 2022 — and don’t expect it to get better any time soon.

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Jacob Mason
Jacob Mason
9 months ago

Thank you for bringing this to people’s attention, Mr. Kotkin.
I hope we can find a relatively a-partisan way forward which avoids incorporating everything into a Levianthan financial system.

chris sullivan
chris sullivan
9 months ago
Reply to  Jacob Mason

Tragically I think that horse has well bolted thanks to the commodification of EVERYTHING on the planet – now just one big investment/gambling enterprize with zero connection to human wellbeing. We are well into the ‘survival of the lucky” darwinian phase of human history. No more kids and many living in mobile homes etc. Total failure of political leadership almost everywhere. Cuba anyone ??

Galeti Tavas
Galeti Tavas
9 months ago
Reply to  Jacob Mason

Come on – this is 100% engineered by the Global Elites. They own all the Left leaning government in the world. Google World Economic Forum ‘Young Leaders’ – they are open, it is on their web site

“During a 2017 appearance at Harvard’s John F. Kennedy School of Government with David Gergen, Schwab boasted
I have to say when I mention names like Mrs Merkel, even Vladimir Putin and so on, they have all been Young Global Leaders of the World Economic Forum, but what we’re really proud of now is the young generation like Prime Minister Trudeau, the President of Argentina and so on.
So we penetrate the cabinets.
So yesterday I was at a reception for Prime Minister Trudeau, and I know that half of his cabinet or even more are Young Global Leaders of the World Economic Forum.”

The Forum of Young Global Leaders is led by a board that lends their ideas and passion to the community’s success and development. We are also guided by an advisory group of YGLs reflecting the diversity of the community. Our leadership Klaus Schwab Founder of the Forum of Young Global Leaders Nicole Schwab

https://duckduckgo.com/?q=klaus+schwab+young+global+leaders&t=ffab&ia=web

Galeti Tavas
Galeti Tavas
9 months ago

Housing is a mere symptom, in its self not the true problem.

Biden’s covid response (and Trump’s, but less was known then – and he was set on by the Dem Mob, but under him it began) was built around vast debt. To manage this interest was kept at zero. This makes house prices rise as a bigger mortgage can now be afforded, so the prices rise to meet what can be afforded. ALSO it meant Corporate Investors, who can get unlimited cash to borrow, if collateralized (by real-estate) at almost no percent – wile inflation is double digit, so in reality they are being paid to borrow. And the asset they buy pays an income. The debt they borrow to buy the house next to you is depreciating at 3 times the rate of the cost to borrow it! The Global Billioneers have had their wealth increase 68% in less than 2 years! And it is YOU who pay them, your money will pay for it all (through the stealth tax called inflation)

Low interest, high inflation = destruction of the workers and savers. Your pension pot you will one day live off is now melting at about 8% a year unless you are way “OUT THE RISK CURVE” into high risk investments as Bonds and Savings have 8% Negative Real Interest! And if out the Risk Curve, say in tech and Tesla – when it crashes 60% you are finished too – YOU CANNOT WIN, you have been set up to fail by the Western Leaders through the Covid Response monetary and fiscal insanity (under orders from the WEF)

Sean Penley
Sean Penley
9 months ago
Reply to  Galeti Tavas

In Trump’s defense, he was trying to counter the effects of some states having lockdowns. By April 2020 he was already trying to convince governors that had lockdowns in place to remove them. But of course they were enjoying their power too much for that. The lockdowns had a domino effect, though, and not just the ones in the US. Businesses in states that never had lockdowns were suffering because they couldn’t get raw materials, or there was less demand for their product, due to other states and many countries having so many restrictions. So he was taking one of the few options he personally had available to attempt to minimize the damage. I’m not saying it was a great idea, but the great idea would have been to stop the lockdown nonsense worldwide, which he didn’t have the power to do.
A particularly good commenter on another site summed it up nicely: Covid didn’t create the economic disaster, the various governmental responses to it did.
Trump made some bad moves early on, but he was also among the first to realize this and try to point out the lockdown nonsense hadn’t worked on the whole ‘2 weeks to flatten the curve’ theory, so there was no point in anyone continuing it. But as with some governors, too many presidents and PMs had seen what they could get away with and liked it. I at least find it funny now that many governors won’t have that option again in the future. CA and NY will, of course, but a number of states have now put more restrictions on a governor’s emergency powers.

Hardee Hodges
Hardee Hodges
9 months ago
Reply to  Galeti Tavas

Whether planned or not the ability to borrow at no cost and collect rents with minimal operating cost has the hedges moving into real estate. As inflation arrives, they can increase rents while still paying minimal interest. A stellar tax haven and a real money maker as the stock market begins to unwind. That in turn does crush the little guy who accepted the risk in hopes of a better return than bank interest – he had few options to save without taking that risk. Financial engineering produces no public product directly but the gains must be put to work. Tax laws need to be adjusted if real public goods are to be created.

Giles Toman
Giles Toman
9 months ago

They want everyone to live in pods and eat bugs.

Jason Highley
Jason Highley
9 months ago

And it won’t end with real life. The metaverse is just an excuse for oligarchs to control scarcity of EVERYTHING in an entirely separate reality – a reality that will be as important for every day life, work, and commerce as they decree that it should be – and to nickel and dime people for access to all of it their entire life. And with central bank digital currencies, they’ll be able to fine tune their scarcity engines and maximize profi- er, efficiency, to the benefit of everyone (but mostly them). Or so they tell themselves.
Cars with government tracking and kill switches. Transportation networks slave to autonomous traffic routines. Do you want remote key fob access for your car? They’re already planning to charge you a monthly fee for that privilege from now on.
Does this brave, new world sound as absolutely sucky and sideways to anyone else as it does to me? Because all I hear is everyone talking about what a wonderland it will be.

Sean Penley
Sean Penley
9 months ago

He is a product of Obama-style thinking. Obama’s administration was very openly against the notion of suburbs, and he pushed to make it harder to zone for single-family dwellings. But I do think the author hits the nail on the head for the reasoning: the Dems are convinced that high density areas are more likely to vote for them. And it kind of plays out.
It is not even a new phenomenon that large urban areas become more herd-like; Jefferson noted this back in the day, saying something to the effect that in large cities people become less interested in freedom (hence why the large blue cities have stricter laws today). At one point yellow fever was hitting Philadelphia pretty hard and Jefferson thought it might actually be a good thing if it encouraged people to move away and into rural areas or smaller towns.