Why are we making the housing shortage more complicated than necessary? The situation is simple: wages are too low and housing too expensive.
Doesn’t that mean we either have to raise wages or provide cheaper housing or both? The answer is that both have been needed for years.
I just copied a story in my file last week that reports that almost a third of our American workers are paid less than $15 an hour, or $31,200 a year.
“It’s shameful at a time when many American companies are posting record profits,” said Kaitlyn Henderson, senior researcher for Oxfam America, author of the workers’ compensation study.
“These are the workers who care for our loved ones, transport and harvest our food, stock our shelves and deliver our packages,” Henderson added.
And low wages are a big reason we’ve had the big quit — along with the pandemic that’s also prompted many baby boomers to retire. As a result, employers have learned that they must pay workers more, provide better benefits, and show more respect if they expect to retain their needed workforce.
This is what happens on the compensation side. Only this is certainly not enough.
When it comes to housing construction, neither government nor industry is moving fast enough. The state has called for 180,000 new units per year between 2015 and 2025 to close the gap, but so far it has only added 80,000 per year, less than half of that goal.
A CalMatters story said Acting State Auditor Michael Tilden reported that the state was simply moving too slowly. That was his assessment after reviewing California’s compliance with a 2019 executive order from Governor Gavin Newson to prioritize the use of state-owned land to create affordable housing.
In a letter to the governor, Tilden wrote, “The rapid creation of affordable housing is critical because more than 1.4 million low-income California renter households lack access to affordable housing.”
I believe the main cause of the crisis is the industry’s inability to build smaller homes than millennials – now in their mid-20s to early 40s – can afford. This failure has forced millennials to continue renting years beyond their desire to fulfill the American dream of owning their own home.
Result: rental charges that fly away.
Last July, a Wall Street Journal article cited data from Freddie Mac that indicated that the number of start-up houses was at its lowest level in 50 years. The agency defines entry-level homes as those under 1,400 square feet.
And in California, where the average home price is now over $800,000, millennials paying high rents are struggling to save enough to buy a home at half that price.
Our housing market in the United States has four sizes of houses – tiny houses of 400 square feet or less; small homes that are up to 1,000 square feet; average homes 1,000 to 2,500 square feet; and the “McMansions” from 2,500.
With today’s wages, rental costs, and home prices, millennials find it hard to buy a 1,400 square foot home, even when it’s available. And when they become available, bidding wars occur frequently.
The situation has prompted some members of our younger generations to buy or build tiny houses. But it’s just a niche market that doesn’t appeal to the majority looking for the American dream.
We’ve all read about how young adults delay marriage and delay having children. It is becoming rare for families today to have more than one or two children.
Many of our older generations remember or were part of families that raised four, five, and more children in homes under 1,200 square feet. So why do households with only three or four members need a home larger than 900 square feet?
I’ve seen two-story floor plans for cute little two-bedroom, two-bathroom homes up to 750 square feet; and three-bedroom, two-bathroom units up to 850 square feet.
They can be built for $350,000 at eight or 10 per acre – to spread the high cost of land.
And if you think the rooms might be too small, I think you’ll find that they’re just as big, if not bigger, than rooms in the average apartment building.
I was also told that housekeeping staff report that not just one, but two low-income families live in many apartments in the Bay Area with less than 800 square feet.
So I predict that we won’t be able to meet the demand for the American dream unless the industry prioritizes and focuses on building tiny homes 900 square feet or less.
Darrell Berkheimer, who lives in Grass Valley, is a frequent contributor to The Union. He has nine books available on Amazon. His two “Essays” books include nearly 120 columns published by The Union, as well as a variety of travel essays and photos. Contact him at [email protected].