After a tumultuous year in the housing market amid inflation and soaring interest rates, local governments of major U.S. cities are facing a slew of economic challenges.
According to the Boston University Initiative on Cities’ 2022 Menino Survey of Mayors, which polled 118 mayors from U.S. cities with more than 75,000 residents, housing costs are at the forefront of those challenges, with 81% of mayors indicating that the issue is among their cities' top economic priorities.
The housing market still remains uncertain after mortgage prices peaked at almost 7% in October 2022, though they have been on a rocky decline since then. Meanwhile, the average monthly rent in the U.S. has been above $1,300 since February 2022.
Some of the increased home prices outside of metropolitan cities occurred after Americans migrated to smaller cities. For example, between January and March this year, the greatest number of people moving to Madison, Wisconsin, were from Chicago, according to Redfin. Home prices in Madison have gone up 5.6% in one year.
"Building sufficient housing and increasing housing affordability is one of Madison's greatest challenges," Madison Mayor Satya Rhodes-Conway, a Democrat, told Yahoo Finance. "My administration has doubled the affordable housing budget in recent years, but we need the private sector to build more affordable projects and a broader variety of housing types, including affordable ownership options."
Rhodes-Conway isn't the only mayor trying to address housing costs — Newark, New Jersey's mayor Ras J. Baraka (D) also told Yahoo Finance that housing affordability remains one of his biggest obstacles.
"Housing is a national problem, and affordability is an issue both locally and statewide," Baraka said.
Despite the fact that housing has been indicated as a priority in the Menino survey each year, mayors ranking it the top challenge came as a surprise to the survey's co-author, David Glick, who also serves as an associate professor of political science at Boston University.
"I don't think we were surprised that a lot of mayors saw housing as a major economic issue in 2022," Glick told Yahoo Finance. "I do think the degree to which it stood out especially relative to inflation was a surprise."
At its peak in June 2022, inflation reached 9.1%. Consequently, this has had a significant impact on the cost of living, which was ranked the second-biggest economic challenge by mayors. Cost of living is typically the amount of money needed for basic expenses like housing, food, taxes, and health care.
San Antonio, which is among the top 10 most populous cities in the U.S., requires an average annual income of $76,098 to afford a home. However, the top two most populous U.S. cities of New York and Los Angeles require more than double that amount.
Mayors and local governments have introduced community programs and legislation for land use reform and funding to address these issues, but many still don't have as much control over different aspects of their cities. Almost 42% of the mayors said they had little control over housing costs, and more than 65% said they had no control over inflation, according to the Menino survey.
Mayor Mattie Parker of Fort Worth, Texas, (R) voiced some of these concerns.
"Fort Worth residents are concerned about the same issues that most major cities are focused on: public safety, cost of living, and quality of life," Parker told Yahoo Finance. "Like many of my fellow mayors, affordable housing and violent crime are two issues that are continually rising to the top."
Some mayors have taken a broader approach to the housing crisis so that residents can both live and work there. Mayor Farrah N. Khan's (D) administration in Irvine, California, is combating the housing crisis by partnering with nonprofits and market-rate developers to attract new businesses in order to grow the local economy.
Housing affordability "is directly linked to economic development," Khan told Yahoo Finance. "We are investing in infrastructure and public transportation to make it easier for people to get around and access employment opportunities. By taking a holistic approach to economic development and housing, we can ensure that Irvine remains a vibrant and inclusive community for generations to come."
Poverty
Poverty was ranked the third-biggest challenge by mayors.
According to the latest data from the U.S. Census Bureau, there are 37.9 million Americans — roughly 11.6% of the total population — living in poverty.
Poverty is also considered one of the leading factors of homelessness, which has increased by 16% since 2020.
"Family homelessness is at an all-time high in Fort Worth and across the country, and making investments in permanent supportive housing for families is more important than ever," Mayor Parker said. "In just the last few years, the city has committed more than $26 million in housing for individuals experiencing homelessness, and we continue to be committed to working with our public, private, and nonprofit partners to champion needed housing projects."
A person with an umbrella walks past a homeless person at Times Square during a rainy day on January 19, 2023 in New York City. (Photo by ANGELA WEISS/AFP) ·ANGELA WEISS via Getty Images
Similarly, Mayor Baraka's city of Newark has experienced chronic homelessness for a while. Its latest point-in-time (PIT) census, which provides a head count of those without permanent homes, found that 1,914 people in the city were homeless in January 2022.
Baraka's administration announced its plans to invest $20 million in housing for low-income families and buy and refurbish deteriorated properties that are made available at lower prices. The goal is to build 3,000 new homes throughout Newark's five wards by 2026 and also create or maintain at least 6,000 affordable housing units for the lowest-income residents.
“We are working to end chronic homelessness in three years through a comprehensive strategic plan in collaboration with public and private partners, and reaching our most vulnerable residents through low-barrier innovative housing models," Baraka said.
—
Tanya is a data reporter for Yahoo Finance. Follow her on Twitter. @tanyakaushal00.
