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

2 days 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.

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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

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