The housing shortage is the root of all of America's problems

• The US hasn't built enough homes in recent decades.
• The shortage is among the reasons homes are unaffordable for many Americans.

The US housing shortage isn't just fueling an affordability crisis. It could be contributing to several of the major problems the country is facing.

Imagine you're a city-dweller living paycheck-to-paycheck. You're trying to save so you can afford a down payment on a home someday, but there's not much left to stash away after paying rent.

A few years later, you buy a home that's probably a little more expensive than you can afford. You used to walk to work, but given you now live an hour away from your job in the city, you begin spending much more time in a car. You make plans to start a family over the next year, but given the cost of the home, the extra years it took to finally obtain it, and its modest size, you decide to aim for a fewer number of children than you had previously envisioned.

This is the gist of the "housing theory of everything," coined in 2021 by economists Sam Bowman and Ben Southwood and housing advocate John Myers. They wrote in the Stripe-owned online magazine Works In Progress that the substantial shortage of homes in the US is a key driver of more than just falling housing affordability in recent decades.

"Western housing shortages do not just prevent many from ever affording their own home. They also drive inequality, climate change, low productivity growth, obesity, and even falling fertility rates," they said.

While roughly two-thirds of US households are owner-occupied, the country is short between 1.5 million and 6 million homes, according to various analyses. The housing market's crash during the Great Recession led the industry to pull back on construction for many years, and materials and labor shortages during the height of the pandemic fueled another slowdown. Some have pointed to complex rules and regulations — many of them related to environmental concerns — that have made it more difficult to build homes.

With the US homeowner vacancy rate — the percent of units available for occupancy — near record lows, the lack of supply has contributed to soaring prices. As of last June, the combination of elevated prices and interest rates made the housing market "more unaffordable than at the peak of the runoff in 2005," Mark Palim, Deputy Chief Economist for Fannie Mae, told Insider.

The housing theory of everything, however, suggests that this lack of affordability is far from the only American problem the housing shortage is contributing to.

Homeowners benefit way more from a good economy and suffer less in a bad one

The authors pointed to a 2021 paper by two University Of Michigan researchers, which concluded that the primary driver of US wealth inequality is not income inequality — but housing inequality. When housing shortages drive up home prices, it's the existing homeowners — who tend to be more well off — that benefit, the authors argued, at the expense of new homebuyers.

"A fixed supply of housing means improvements in people's aggregate incomes often partially go to landowners, since people bid up the price of housing with some of their increased income," they said.

And when homeownership — a driver of wealth for many families — is out of reach for Americans, this can contribute to persisting inequality. Roughly 90% of US households in the top 20% income bracket own their own homes, according to a 2021 Cleveland Fed report, compared to less than half of households in the bottom 20%.

Even for households that are content as renters, a shortage of homes pushes more people to rent, which ultimately drives up rental rates.

Fewer homes in cities increases car use and worsens climate change

Americans are the kings of the road. As of 2015, the US had 823 cars per 1,000 people, more than any other country in the world. In 2019, the average American traveled roughly two times the number of miles in vehicles than countries like France, Germany, or the UK.

Most of these vehicles are not yet electric, which means US drivers are responsible for a boatload of carbon emissions that are fueling the broader climate crisis.

While Americans surely love their vehicles, many are also dependent on them as a means of transportation. A shortage of housing in more densely populated areas like cities, the authors argued — where cars as less necessary — have pushed people out to areas where they need a vehicle to get to work and the grocery store.

The authors compared the US to Japan, where they said lighter regulations have allowed the country's cities "to grow far more densely" than those in the States. On the whole, Japan is roughly 12 times more densely populated than the US. This is among the reasons, they argued, that people in Japanese cities drive significantly less than Americans and have had lower per capita carbon emissions.

"Most American cities are far too spread out to get around by walking, cycling or even public transport, which needs dense pockets of population to be efficient," they said.

When increased driving leads to less physical activity among a substantial portion of the population, obesity could become a more likely outcome as well. The authors noted that in Manhattan, the heart of the US's most densely populated city where less than a quarter of households own a car, the obesity rate is less than half that of the national average.

America's obesity rate has shot up in recent decades, and it's had significant health consequences. Experts haven't come to a consensus on why this has happened, but a failure to build housing — particularly in cities — could be part of the answer.

Families may put off having kids if they don't have the space

In 2021, the US fertility rate remained near the record-low 2020 figure since the data became available in the 1930's. Similar to the obesity spike, experts have pointed to several explanations for the decline in past decades, including increased accessibility to contraception, the growth of women in the workforce, and the high cost of raising children.

But housing could be another piece of the puzzle. When a larger living space isn't affordable, it may dissuade people from starting or expanding their families. The authors cited a 2016 UK study that found a 10% rise in house prices was associated with a 1.3% fall in overall births. A 2018 Zillow study came to a similar conclusion when analyzing US data.

And even if families manage to land a larger home, the high cost it took to acquire it may lead some to ultimately have fewer children than they had initially planned.