'It's Moving In The Wrong Direction': Warnock Laments Housing Crisis's Impact On Economic Mobility

15 hours ago

During last Wednesday's Senate Banking Committee hearing, Sen. Raphael Warnock (D-GA) questioned witnesses about the impacts of increased rent and home costs on upward economic mobility for younger generations.

Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:

https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript

Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com

Transcript

00:00Thank you so very much, Mr. Chairman. We have a housing availability and affordability crisis

00:06in this country, and I'm especially concerned about young Americans and their ability to pay

00:13rent or buy their first home. I grew up in public housing and I've been reflecting these days

00:21on the fact that I was able to buy my first home pretty young, but young folks coming along

00:28now, it's tough. Dr. Glazer, you're a Harvard economics professor. Are you concerned about

00:34what you're seeing in the economic data about young Americans and home ownership?

00:40Thank you. Thank you, Senator. I certainly am.

00:44And I had added a paper of mine from the Journal of Economic Perspectives from five years ago,

00:50which looks at many consequences of housing regulation, one of which is a transfer of

00:55housing wealth from the young to the old. And we compared 2013 and 1983, since it was some time

01:02ago. 1983, there were plenty of 25 to 34-year-olds that had substantial housing wealth. That's just

01:07gone. But by contrast, if you look at the 65 to 74-year-olds or the 75 pluses, at the top end of

01:14that distribution, they are enormously wealthy. And so if you bought a home in Los Angeles in 1973,

01:20you have done spectacularly well. But if you're trying to buy a home in Los Angeles in 2025,

01:26you're not so well off. 1973, ancient history for young folks of that age. I'm just talking

01:34about the college students I know. So massive transfers, seriously, of wealth and a lack of

01:44the inability, particularly to pass wealth from one generation to the next. It's moving in the

01:50wrong direction, which has implications for all of us, regardless of our generation. This is a

01:57big problem that will require big solutions. And last year, we actually saw the largest increase

02:02in rental costs in a decade, while the share of first-time homebuyers reached an all-time low.

02:08So tough pickings, whether you're looking to rent or buy. Georgia has the lowest home ownership

02:16rate in the entire Southeast. Ms. Willis, what are the consequences of high rental costs

02:22and lack of affordable housing on upward mobility and the broader economy?

02:28Thank you, Senator. I think on an individual level, when people with low incomes can't afford

02:35housing, they're forced to make impossible trade-offs. So we're talking about trade-offs

02:40between paying rent and buying groceries, or medications, or investing in their children's

02:46education. But more broadly, I would say that researchers have found that housing constraints

02:53have lowered GDP growth by 36% over the study period. And in any given year, GDP

03:05was 3.7% lower. And so part of the answer, yes, is zoning reforms, as we talked about today.

03:11So this is, I'll let you continue. So this is not just bad for the folks who are buying homes.

03:16It's bad for all of us. Absolutely. That's right. Absolutely. And again,

03:22zoning reforms are important. We talked about that a bit here today. But it's also,

03:26it needs to address the market failures that impact households with the lowest incomes.

03:32And so because the market cannot, by itself, serve these households without federal investments.

03:37What do young people, or folks who are just trying to buy their first home, first-time

03:41homebuyers, what do they cite most often as the biggest barrier?

03:46Two words, down payment costs. Down payment costs. Absolutely.

03:50So I know that to be the case. And that's why I introduced the Rent Relief Act and the

03:57Down Payment Towards Equity Act with some of my colleagues. I think these are important

04:03bills that address the affordability issue around, and the accessibility issue around

04:10housing. Because when the private market fails to address our housing crisis,

04:14the government must help with smart investments. And so we get a healthy balance between the

04:21private and the public sector trying to make this work. Let me be clear, government can also get in

04:26the way, especially local government. Dr. Glazer, does our housing shortage have roots in restrictive

04:32local zoning regulations? You were beginning, I think, to talk about that a little while ago.

04:40I believe that very strongly, Senator. And I've been trying to make this point for 25 years.

04:44And I think the problem has only gotten worse. And yes, the problem is fundamentally localities

04:50saying no to adding density, to adding homes, and they're fundamentally saying no to the

04:54American dream. Thank you so much. This restrictive zoning, often a legacy of Jim Crow era

05:02racism, let's be clear, is still a persistent problem. And it's a problem,

05:10even in blue cities, under Democratic leadership. And that's why I agree with the chairman and many

05:17of my Republican friends across the aisle that we've got to solve our housing crisis. And this

05:21will absolutely require regulatory right sizing. We'll never make a dent in our housing shortage.

05:28I think also, in addition to that, without federal investments, like my two bills,

05:34as well as my bill with the ranking member to construct 3 million new housing units

05:38and lower housing costs for all. This is a serious issue. And I think we need bipartisan solutions.

05:45Thank you so very much. Thanks, Senator. I look forward to you and Senator Moreno working

05:48together on solving these issues. Senator McCormick. Thank you, Mr. Chairman and Ranking

05:54Member Warren.

'It's Moving In The Wrong Direction': Warnock Laments Housing Crisis's Impact On Economic Mobility

Category

Transcript

Recommended