The Morning: Why too few homes get built

Plus, the latest from the Democratic convention.

View in browser|nytimes.com August 22, 2024 Good morning. Today, my colleague Conor Dougherty helps you understand why houses are so expensive. We also have all the latest from the Democratic convention. —David Leonhardt Construction in White Cloud, Mich. Jamie Kelter Davis for The New York Times Dwell on this By Conor Dougherty I cover housing. The housing crunch has been well documented in high-cost big cities, where rents and mortgages break the bank. Now it has moved into the rest of the country. The culprit is too little housing, and it began two decades ago. In the three years leading up to the Great Recession, homebuilders started about two million homes a year. That number plunged during the crisis and never fully rebounded. Since 2010, builders have started about 1.1 million new homes a year on average — far below the 1.6 million needed to keep up with population growth. America is millions of homes behind, and it gets worse each year. Source: Census Bureau, via Federal Reserve The New York Times I spent a week this summer reporting in Kalamazoo, Mich., which isn't an obvious candidate for a housing crisis. But prices exploded as the supply of homes fell behind the need. Now even middle-class families earning six figures struggle to make ends meet there, and Michigan lawmakers are subsidizing developers who build for those residents. The Times published my article about it this morning. In today's newsletter, I'll explain how this happened nationwide, why it could take a long time to fix and what policymakers are doing about it. Skittish builders Cities and states understand they have a housing problem. To increase the pace of construction, many have cut back regulatory barriers — like zoning and environmental rules — that make housing slow and expensive to build. Since 2018, for instance, states including California, Oregon, Montana and Arizona have passed laws to allow duplexes and small apartment buildings in neighborhoods that once contained only single-family homes. But the nation's housing shortage isn't only about zoning in cities. For one thing, developers everywhere find it harder to raise money, and homeowners find it harder to get loans. That's because banks and the government, in a quest to prevent another housing bubble, have raised lending standards and made mortgages harder to get. For another, builders simply aren't putting up subdivisions at the rate they once did. They're cautious about overbuilding after the losses they incurred in the 2008 crisis, and they've become reluctant to invest and expand before they know they have a winning hand. For instance, many homebuilders moved away from off-the-shelf ("on spec") homes; now they prefer customers to prepay for properties before they're built. Land developers — companies that take a piece of dirt and add basic infrastructure like streets, plumbing and power, creating the lots where new homes are built — have also cut back. The number of vacant developed lots, or places where a homebuilder could start construction tomorrow, is still 40 percent below its pre-Great Recession level, said Ali Wolf, chief economist at Zonda, a data and consulting firm. Source: Zonda | Note: 2024 through the second quarter. The New York Times "The Great Recession broke the U.S. housing market," she told me. A generational problem Most people aren't going to live in new houses. But the entire housing market still benefits from them. That's because new homes tend to get cheaper as they age. Over time, this creates what housing wonks call "naturally occurring affordable housing," which is a polite way of saying places that are older and less nice. They're a huge piece of the affordability puzzle; they helped Kalamazoo remain affordable for middle-class households. In Kalamazoo, Mich. Jamie Kelter Davis for The New York Times What's happened in Kalamazoo and around the country is that older, cheaper units have either fallen into uninhabitable disrepair or been sold to investors who rehab them and raise the rents. Rehabs like that are necessary, but without a constant pipeline of new construction, there aren't "new old" buildings for the millions of families who need lower rents. To combat this, both Kalamazoo County and Michigan have expanded housing aid to middle-income households that used to be ineligible. The hope is that this and other subsidies will encourage builders to expand if they believe they'll find buyers and renters who can afford the homes they make. It's part of a nationwide shift. Housing assistance used to focus on poverty. Now it's also becoming a middle-class support program. Shades of the same idea are in Vice President Kamala Harris's housing plan, which calls for assistance for both first-time home buyers and developers who build housing for them. Cities and states are changing where and how housing is built; Republicans and Democrats agree on the urgency, and housing was a theme at both political conventions this summer. (Barack Obama and Bill Clinton mentioned it in their speeches this week.) But those changes will be measured in decades because we fell so far behind. In the meantime, millions of Americans are stuck. THE LATEST NEWS Democratic Convention Tim Walz Kenny Holston/The New York Times Tim Walz, introduced by former students and football players he coached, urged Democrats to do the work to elect Harris. "It's the fourth quarter. We're down a field goal. But we're on offense and we've got the ball," he said. "You are my entire world, and I love you," Walz told his family onstage. In the audience, his son Gus sobbed, pointed and mouthed, "That's my dad." (Watch the video.) Walz's high-energy speech reflected unpretentious, mischievous style he forged growing up in Nebraska. Read a transcript. The parents of an American hostage held by Hamas thanked President Biden and Harris for working toward a deal to free their son and end the war in Gaza. Delegates chanted "bring them home." Bill Clinton painted Donald Trump as self-interested and warned Democrats against complacency. "We've seen more than one election slip away from us when we thought it couldn't happen," he said. Several speakers criticized Trump for tanking a bipartisan border-security bill and defended Harris's record on the subject. Nancy Pelosi and others described their experiences on Jan. 6, warning of a continued threat to democracy. "I took an oath to defend the Constitution," a former Capitol Police officer injured in the attack said, adding, "To Donald Trump I ask, why don't you?" Celebrities abounded: Oprah Winfrey made a surprise appearance, Stevie Wonder and John Legend sang, Mindy Kaling hosted and Amanda Gorman performed a poem. Kenan Thompson of "Saturday Night Live" read from an oversize copy of Project 2025, Trump allies' governing blueprint, asking: "You ever seen a document that could kill a small animal and democracy at the same time?" More on the Election Robert F. Kennedy Jr. is expected to end his presidential campaign this week, and is considering endorsing Trump. Trump held his first outdoor rally since the assassination attempt. He spoke in North Carolina from behind bulletproof glass, with snipers on nearby rooftops. He repeated his personal attacks on Harris and Biden, saying advisers had asked him to stick to policy but Democrats were "getting personal all night long." Democratic fund-raising soared after Biden dropped out last month. U.S. Economy The Federal Reserve is poised to cut interest rates next month, minutes from its last meeting showed. The U.S. economy added about 818,000 fewer jobs over the past year than previously recorded, a large revision of Labor Department figures showed. Some Wall Street firms got access to the revised figures before they appeared on the department's website, which could have let them trade on the information before the public. It's unclear how the data leaked. Israel-Hamas War In northern Gaza.  Omar Al-Qattaa/Agence France-Presse — Getty Images In Gaza, extended families and hospital workers are caring for the enclave's many recently orphaned children. Hundreds of ultra-Orthodox Israeli men clashed with the police in Jerusalem. They were protesting a court order that overturned their community's exemption from the military draft. More International News In Kolkata, India. Piyal Adhikary/EPA, via Shutterstock The rape and murder of a trainee doctor in her own hospital has highlighted how unsafe India can be for women. A labor dispute halted rail freight in Canada. The shutdown could disrupt trade with the U.S. A bus from Pakistan overturned while traveling through Iran toward a Shiite Muslim pilgrimage site, killing at least 28 people, according to Iranian state media. Other Big Stories The percentage of Black and Hispanic students in M.I.T.'s incoming class fell after last year's affirmative action ban. The share of Asian American students rose, while the share of white students fell slightly. Bird flu shows no signs of receding among American cattle and farm workers, and has spread to poultry. Representative Bill Pascrell, a 14-term New Jersey progressive who was poised to become the House's oldest member, died at 87. Opinions Celebrities' assistants have little power and a lot of responsibility. It's a toxic dynamic, writes Rowena Chiu, who was an assistant to Harvey Weinstein. Here are columns by Carlos Lozada on Harris's shifting convictions and Charles Blow on her "Beyoncé moment." Subscribe Today The Morning highlights a small portion of the journalism that The New York Times offers. To access all of it, become a subscriber with this introductory offer. MORNING READS Photo illustration by Lauren Peters-Collaer "Tradwives": Women who dress up as 1950s homemakers are driving the internet insane. Ask Well: "I had a C-section about a year ago, but my scar still sometimes hurts, itches and even smells. What's going on?" The discount id: How Costco hacked the American shopping psyche. Lives Lived: Al Attles was a little-known player out of a historically Black college when the Warriors selected him in the 1960 N.B.A. draft. He became a face of the franchise for six decades, as a player, coach and general manager. Attles died at 87. SPORTS M.L.B.: The Cincinnati Reds first baseman Joey Votto announced his retirement after a 17-year career that will likely land him in the Hall of Fame. He was everything baseball needed, our columnist writes. N.F.L.: The Denver Broncos named the rookie Bo Nix as their starting quarterback after an impressive training camp. Cricket: The sport's governing body moved the Women's World Cup from Bangladesh to the United Arab Emirates because of political instability. ARTS AND IDEAS Monica Garwood Sex therapists deal with the same issues repeatedly: couples worried about mismatched libidos or whether they are having a "normal" amount of sex. Nearly a dozen experts shared their most common advice, including avoiding comparison, changing definitions of sex and understanding that there is more than one type of desire. Read more here. More on culture In Indianapolis.  Jon Cherry for The New York Times Every summer, hundreds of college-age musicians spend hours and their own money pursuing a single goal: the drum corps world championship. On late night, Seth Meyers praised Michelle Obama's convention speech. "I'm a little bummed she doesn't want to get into politics," he said. "But I'm very happy she doesn't want to host a late-night talk show." THE MORNING RECOMMENDS … David Malosh for The New York Times Add raisins and green olives to this Cuban-inspired picadillo for a sweet-salty-tangy pop. Book a last-minute Labor Day vacation. Invest in dorm gear that will last beyond graduation. Upgrade your gym bag. GAMES Here is today's Spelling Bee. Yesterday's pangrams were ambling, blaming and gambling. And here are today's Mini Crossword, Wordle, Sudoku, Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. Sign up here to get this newsletter in your inbox. Reach our team at themorning@nytimes.com. Editor: David Leonhardt Deputy Editor: Adam B. Kushner News Editor: Tom Wright-Piersanti Associate Editor: Lauren Jackson News Staff: Desiree Ibekwe, Sean Kawasaki-Culligan, Brent Lewis, German Lopez, Ian Prasad Philbrick, Ashley Wu News Assistant: Lyna Bentahar Saturday Writer: Melissa Kirsch Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account. To stop receiving The Morning, unsubscribe. To opt out of other promotional emails from The Times, including those regarding The Athletic, manage your email settings. To opt out of updates and offers sent from The Athletic, submit a request. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018