The Grim Math of the Working-Class Housing Crisis

Consider this sentence:<p>&quot;That inability is mushrooming, driven by increasing rents across much of the country and wages that aren’t going anywhere.&quot;<p>One has to wonder: where is the money coming from that drives up these rents, if wages are stagnant? The issue is supply and demand.<p>Why has supply decreased? Part of the answer is the housing bust, which followed the housing boom (irrational exuberance was counter balanced by irrational pessimism):<p><a href="http://www.calculatedriskblog.com/2013/09/ny-times-on-shortage-of-buildable-lots.html" rel="nofollow">http:&#x2F;&#x2F;www.calculatedriskblog.com&#x2F;2013&#x2F;09&#x2F;ny-times-on-shorta...</a><p>As it says there:<p>&quot;The latest land rush is in full swing, as developers realize that they have failed to feed the zoning, permitting and mapping pipeline, which can take months or years to turn raw fields into buildable lots.&quot;<p>The other side of the supply and demand issue is the increase of foreign demand. Some of the money comes in the form of foreign money that speculates in the American real estate:<p><a href="http://www.nytimes.com/2011/07/07/nyregion/more-apartments-are-empty-yet-rented-or-owned-census-finds.html?pagewanted=all" rel="nofollow">http:&#x2F;&#x2F;www.nytimes.com&#x2F;2011&#x2F;07&#x2F;07&#x2F;nyregion&#x2F;more-apartments-a...</a><p>As it says there:<p>&quot;But some Manhattan neighborhoods are assuming that vacant feeling the year round, because the people who own or rent apartments there actually live somewhere else most of the time. &quot;<p>A combination of housing bust and foreign speculation in USA real estate leads to a situation where rents go up even when wages are stagnant or falling.<p>-----------<p>A possible explanation of the international forces at work is offered here:<p><a href="http://krugman.blogs.nytimes.com/2013/09/26/trade-and-secular-stagnation/" rel="nofollow">http:&#x2F;&#x2F;krugman.blogs.nytimes.com&#x2F;2013&#x2F;09&#x2F;26&#x2F;trade-and-secula...</a><p>This was interesting to me:<p>&quot;So the causation could run the other way, with deregulation and rising leverage pulling in foreign capital, keeping the dollar overvalued, and producing persistent deficits.&quot;

&quot;New York mayoral candidate Bill de Blasio has made affordable housing a centerpiece of his campaign. If polls are any indication, he will soon have the chance to put his money where his mouth is.&quot;<p>... no... he&#x27;s really going to put <i>other peoples&#x27;</i> money where his mouth is. taxpayers&#x27; money. landlords&#x27; money. developers&#x27; money. Rent Control 2.0, here we come! It worked so well the last time. :P<p>The socialists will probably mod me down for this, obviously.

Part of me wonders if this is a temporary problem that got triggered by urban environments becoming extremely trendy in the last decade or so. Either way, we are not only losing a solid worker class, but also some of the skilled labor force because of it (especially here in SF).

One problem is the very policies supporting cheap housing (rent control for example) make it much less profitable for people to invest in medium income housing.

This might explain NYC a bit, given the large number of bankers and banking firms there - 5.2 times more than the average, is their pay:<p><a href="http://www.zerohedge.com/news/2013-10-22/chart-day-average-new-york-banker-makes-52-more-average-mere-mortal" rel="nofollow">http:&#x2F;&#x2F;www.zerohedge.com&#x2F;news&#x2F;2013-10-22&#x2F;chart-day-average-n...</a>

What would happen if one of these cities passed a law that apartment rents would have to be adjust for income level? So lower income people would get a break, and higher income would have to pay more? Would that be effective, and would it be legal?<p>Or, the city could have a housing subsidy tax that is progressive based on income.