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The United States is grappling with a housing crisis of historic proportions. In 2018, the shortfall stood at 2.5 million homes, but by 2024, it surged to an estimated 6–7 million. This shortage has left younger generations, especially those under 35, struggling to find affordable housing amidst skyrocketing prices, stagnant wages, and a lack of entry-level home construction.
Key Drivers of the Housing Crisis
Decline in Starter-Home Construction
In the 1970s, approximately 418,000 entry-level homes were built annually. By 2024, this number plummeted to just 55,000. Back in 1976, 40% of new homes were under 1,400 square feet—today, that figure has dropped to 10%. Builders now focus on larger, higher-margin homes, leaving first-time buyers with limited, often unaffordable options.
Home Prices Far Outpacing Income Growth
The median home price has risen from $23,000 in 1970 to $420,000 in 2024, an 18.3x increase. Meanwhile, median household income has only grown 8x in the same period, from $9,800 to $80,000. This disparity means it takes the average buyer seven years to save for a down payment, compared to just 2.4 years in 1970.
Increased Investor Activity
Large institutional investors like BlackRock, Vanguard, and State Street have significantly impacted the housing market by purchasing low-cost homes in bulk, turning them into rental properties. This has tripled investor market share since 2000, making it even harder for individuals to secure affordable homes.
Zoning Laws and Local Resistance
Restrictive zoning laws and local opposition to new developments—known as "Not In My Backyard" (NIMBYism)—have severely limited construction in high-demand areas, contributing to the growing supply-demand gap.
Labor and Material Shortages
The construction industry is also battling a shortage of skilled workers, with 81% of firms reporting hiring difficulties. Coupled with rising costs for materials like lumber—fueled by pandemic-related disruptions—building new homes has become increasingly challenging.
Generational Disparities
Millennials, now aged 28-43, make up the largest homebuying demographic but face significant hurdles. Rising costs and limited supply force many to rent or remain at home with parents. Today, 52% of adults aged 18-29 live with their parents, compared to 31% in 1970.
Bold Solutions to Address the Crisis
Expand Development into New Areas
While 82% of Americans live on just 2% of U.S. land, vast undeveloped areas remain untapped. Cities like Frisco, Texas, which grew from 6,000 residents in 1990 to 234,000 in 2024, demonstrate the potential of investing in underutilized regions. Developing new areas like Gilbert, AZ, and Johns Creek, GA, can alleviate pressure on urban centers.
Incentivize Starter-Home Construction
Governments at the state and local levels can incentivize the building of smaller, affordable homes under 1,400 square feet by reducing taxes, offering grants, or streamlining the permitting process.
Promote Regional Decentralization
Encouraging development in less populated regions through innovative urban planning can balance housing demand. Successful examples like Dubai’s transformation from desert to global metropolis underscore the potential of bold vision and strategic investment.
Targeted Policy Interventions
While sweeping price controls may not align with a free-market system, focused measures like tax credits for first-time homebuyers or subsidies for small-scale builders can foster a more equitable housing market.
This housing crisis doesn’t just affect one generation—it impacts the future of the American Dream. Millennials and Gen Z must advocate for policies that ensure homeownership remains attainable. Expanding development, incentivizing starter homes, and curbing investor dominance can pave the way for a more accessible market.
If you’re under 35, share this article and discuss these ideas with your peers. Together, we can push for solutions to a problem that impacts us all. At Resilient Closers of Arizona, we believe in empowering the next generation of leaders and entrepreneurs with the tools, knowledge, and strategies to thrive. Together, we can create solutions that shape the future. Let’s rewrite the story of homeownership, one bold move at a time.
Hannah Mayers is the lead writer for https://www.resilientresidentialinvestments.com/. Follow Hannah on X and look for her on RCA “TheResilientCast."
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