Our current housing crisis began in 2008 — and it never ended

Opinion>Opinions - Finance The views expressed by contributors are their own and not the view of The Hill Our current housing crisis began in 2008 — and it never ended Comments: by Valerie White, opinion contributor - 08/07/26 7:30 AM ET Comments: Link copied by Valerie White, opinion contributor - 08/07/26 7:30 AM ET Comments: Link copied

America’s housing crisis has been rightly blamed on a lack of supply. Lately the finger has been pointed at inflation as the driving force behind it.

Some evidence seems to support that notion. Home prices remain stubbornly high. Mortgage rates have more than doubled from their pandemic lows. Insurance premiums are soaring. Construction costs continue to rise, and rents consume an ever-larger share of household budgets.

But inflation did not create America’s housing crisis. It only exposed it.

To understand why millions of Americans are struggling to find housing they can afford, we need to look beyond the economic headlines of the last few years and revisit a crisis that began nearly two decades ago, in the wreckage of the Global Financial Crisis.

When the housing market collapsed in 2008, the damage extended far beyond foreclosures and failing banks. Homebuilders went out of business. Construction workers left the industry. Lending tightened dramatically. Investment dried up. Housing production fell off a cliff.

The economy eventually recovered, but housing production never did. In fact, the 2010s saw the fewest single-family home construction starts since at least the 1960s and nearly half as many as the decade that preceded it.

Now, Freddie Mac estimates the nation is short by about 3.7 million homes of what is needed to meet demand. The National Low Income Housing Coalition estimates that there is a shortage of 7.2 million rental homes affordable to renters with incomes at or below the federal poverty guideline.

A recent report from my organization’s National Housing Strategic Initiatives team notes that housing production dropped considerably in the aftermath of the financial crisis and “has failed to catch up with current demand.” The report argues that the effects of the housing crash continue to echo throughout today’s market, helping to drive the affordability challenges confronting households across the country.

That observation should fundamentally change how we think about housing affordability.

While the conventional narrative treats today’s crisis as a recent phenomenon driven by inflation, interest rates, or pandemic-era disruptions, those factors are really accelerants poured onto a fire that was already burning.

The reality is that the nation entered the pandemic with a severe housing shortage that had been accumulating for more than a decade.

When demand surged and borrowing costs fell during the pandemic, there was little available supply to absorb it. Prices climbed as families found themselves bidding against one another for an increasingly limited number of homes.

Now, as inflation and higher interest rates put additional pressure on the market, the shortage created after 2008 is becoming even more visible. It is perhaps best seen through the perspective of affordable housing providers. Unlike market-rate developers, affordable housing operators often have limited ability to raise rents to offset rising expenses, even though they are confronting many of the same economic pressures affecting the broader market.

According to the report, operating costs for affordable housing have increased dramatically in recent years, with insurance spiking more than 110 percent, and repairs and maintenance costs climbing 35 percent since 2017.

Meanwhile, multifamily housing starts have slowed, affordable housing shortages persist, and hundreds of thousands of existing affordable units are expected to see affordability restrictions expire in the years ahead.

These are serious challenges, and for years policymakers have debated housing affordability through the lens of monthly costs. They argue about mortgage rates, rent caps, insurance premiums, property taxes, zoning regulations, environmental reviews, institutional investors, and short-term economic trends. But the fact is, the country simply stopped building enough housing after 2008 and never made up the difference.

We must recognize that there is no way to fix this overnight, but there are solutions. First, we must start viewing housing as part of our essential economic infrastructure. A functioning economy depends on workers of all types — teachers, nurses, first responders — being able to afford to live near their jobs. Economic mobility depends on families having access to stable and affordable housing.

With that mindset, policymakers, investors, and housing organizations can then work together to strengthen the housing ecosystem, including by expanding access to capital, supporting nonprofit and emerging housing developers, preserving existing affordable housing stock, modernizing financing tools, and advancing federal, state, and local policies that encourage housing production and preservation.

The Great Recession officially ended in 2009, but the housing recession never did.

Until policymakers address the structural housing deficit that emerged from the financial crisis, Americans will continue to experience the consequences through higher rents, higher home prices, and fewer opportunities to achieve economic security.

Inflation may be today’s villain. But the story began long before inflation arrived.

Valerie White is head of National Housing Strategic Initiatives for Local Initiatives Support Corporation.

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