Renters financially stressed

December 29, 2015

http://www.cnbc.com/2015/12/09/housings-new-crisis-half-your-income-for-rent.html

I’m finally getting caught up on some things.  One of them is this above-linked article that appeared on CNBC three weeks ago.  It illustrates the fact that, in America, home ownership is declining and housing is becoming less affordable, even for renters.

In Five Short Blasts we saw how a rising population density, as it does with the per capita consumption of virtually everything, dramatically reduces the per capita consumption of dwelling space.  The average citizen of Japan, a nation ten times as densely populated as the U.S., lives in a dwelling less than one third the size of the average American’s.  So it’s only reasonable to expect that, as America grows more densely populated, the same thing will happen:  our homes will get smaller.

Indeed, as the per capita consumption of everything declines, it’s inescapable that employment will decline as well, and poverty will increase.  People who are poor can afford even less, exacerbating the decline in consumption.  Thus, worsening population density and rising poverty work synergistically to spawn a downward spiral.

This article is evidence of the downward spiral in the economic condition of Americans:

“The crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes. These affordability challenges also are increasingly afflicting moderate-income households,” said Chris Herbert, managing director of the center.  (Harvard Joint Center for Housing Studies)

… Homeownership is now at the lowest level in half a century, and some expect it could go significantly lower. Household formation is expected to continue its slow rise, but almost entirely on renter households, not owner households.

It’s important to note the relationship here between incomes and housing.  Yes, it’s only natural that poorer people will tend to be renters instead of home buyers and will occupy smaller dwellings.  But the trend toward smaller dwellings also reduces employment in the housing industry, just as lower per capita consumption reduces employment in every industry.  We consume less because we grow more crowded.  We grow poorer when we consume less.  And we then consume even less because we’re poorer.  It’s a process that feeds on itself.

There’s only one way to break this cycle – to stop the rise in population density and level off our population at a sustainable level.