Why Is Housing So Expensive Today?

Introduction

Imagine two families. The first buys a home in 1985, while the second tries to buy a similar home today. Both have stable jobs, both work hard, and both save for a down payment. Yet the second family faces a very different financial reality. The home costs substantially more relative to household income, saving for a down payment takes longer, and monthly payments can consume an enormous portion of the family's budget. What changed? Did houses become dramatically better? Did construction become more expensive? Are investors buying everything? Or did something more fundamental happen to the housing market?

To answer these questions, we'll explore four influential books. Edward Glaeser's Triumph of the City explains why housing becomes expensive in desirable places. Shane Phillips's The Affordable City examines the policies that shape housing supply and affordability. Richard Rothstein's The Color of Law reveals how government decisions created lasting patterns of housing inequality. And Elizabeth Warren and Amelia Warren Tyagi's The Two-Income Trap explores why families compete so intensely for homes in desirable neighborhoods. Together, these ideas reveal why housing affordability has become one of the defining economic challenges of modern life.