Democrats Talk Housing Affordability House affordability was a topic in the last Democratic presidential debate. Economist Robert Shiller talks with NPR's Scott Simon about the affordability problem across the U.S.

Democrats Talk Housing Affordability

Democrats Talk Housing Affordability

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

House affordability was a topic in the last Democratic presidential debate. Economist Robert Shiller talks with NPR's Scott Simon about the affordability problem across the U.S.


This week's Democratic presidential debate touched on a topic that usually doesn't get much attention in these forums.


ELIZABETH WARREN: Our housing problem in America is a problem on the supply side. And that means that the federal government stopped building new housing a long time ago, affordable housing.

SIMON: That's Senator Elizabeth Warren, of course. Democrats spent several minutes debating housing affordability and what they might do about it. Nobel laureate economist Robert Shiller joins us. He's co-creator of the widely used Case Shiller Home Price Index. He's been studying housing for decades.

Professor, thanks so much for being with us.

ROBERT SHILLER: My pleasure.

SIMON: Housing affordability is a big issue in many major cities certainly, but is it just in high-tech commercial centers like Boston, San Francisco and New York?

SHILLER: It is especially in the high-tech centers. But overall for the whole country, it's getting worse, gradually through time.

SIMON: What are some of the factors that have made housing more difficult for many people to afford in this country?

SHILLER: For buyers, we've seen a home price boom since 2012, which has pushed home prices up quite a bit. For renters, rents have gone up kind of steadily and smoothly, not as much as home prices. But the wages haven't kept up that they earn to pay the rent. So in either case, there is some suggestion of a problem.

SIMON: During the debate this week, Senator Cory Booker of New Jersey said gentrification was a problem and it puts many low-income workers a lot farther away from where they earn a living. Here's what he suggests.


CORY BOOKER: And my plan is very simple. If you're a renter who pays more than a third of your income in rent, then you will get a refundable tax credit between the amount you're paying in the area median rent. That empowers people in the same way we empower homeowners.

SIMON: Of course, the government gives homeowners a mortgage interest deduction. But what about specifically Senator Booker's idea about a refundable tax credit? How do you feel about that?

SHILLER: Well, we already have refundable Earned Income Tax Credit. This is tying it to the price of housing. People who live in cities where rent and home prices are heavily pushed up by zoning regulations that try to keep people out, they deserve some compensation.

SIMON: And what about the argument that some people have made that landlords would simply charge more money because they know they could get it from a government guaranteed program?

SHILLER: There is some truth to that. But on the other hand, if people are actually paying more in rent, that encourages a supply increase.

SIMON: Another bit from the debate here we want to play, something here from Senator Elizabeth Warren.


WARREN: So I've got a plan for 3.2 million new housing units in America. Those are housing units for working families, for the working poor, for the poor poor. Housing is how we build wealth in America.

SIMON: Senator Warren didn't have a chance to say this in the debate, but she has a plan on her website that calls for $500 billion in federal housing investment over the next 10 years. Does that strike you as wise?

SHILLER: If she has 3 million new units, that will make a 1 or 2% increase in the housing stock. And it will deal with the problem somewhat. It sounds to me - right - that we should aim for doing something like that, at least.

SIMON: Now the Secretary of Housing and Urban Development Ben Carson has had a proposal that would look at using federal funds to try and induce cities to overhaul zoning rules, which he says could lead to the construction of affordable homes. Does that strike you as a good idea?

SHILLER: Yeah, something like that. Part of the reason prices are elevated is that local zoning boards are deliberately trying to keep people out that don't meet up to their standards. On the other hand, we do have to preserve zoning restrictions because you don't want a coal-burning burning power plant right next door to your house.

SIMON: You've been looking at housing markets for so many decades now. Could you name any one, two or three policies you think could help immediately?

SHILLER: Well, one thing that I've been working on over the years is redesigning mortgages to help prevent the disaster of foreclosure and mortgages that have a automatic workout attached to them if home prices fall. Another thing that comes to my mind is the home equity insurance that was first issued by Oak Park, Ill., in the 1970s. It was a program to protect homeowners against declining home prices, which often destroy neighborhoods. And I think there's a lesson there.

SIMON: Nobel laureate Robert Shiller, Sterling professor of economics at Yale.

Thanks so much for being with us, sir.

SHILLER: My pleasure.

Copyright © 2019 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.