A middle-aged executive recently got that big break—a promotion that transferred him from a branch office in Washington, D.C., to company headquarters in Manhattan. His professional leap forward sharply set back his personal standard of living. For the first time in his life, he cannot buy a house or rent an apartment that fits both his means and his expectations. He moved out of a $400-a-month, eleven-room house in the capital; he is willing to pay $600 for less space in an area that has commendable schools and is not more than one hour's commuting time away from Manhattan—but cannot find anything suitable. He is also willing to buy a house. "When I tell real estate agents that I can only go up to $60,000," he says, "they just laugh."
Another executive was recently shifted from Manhattan to Chicago. When he put his suburban New York home up for sale, one eager would-be buyer offered him $500 to be first to bid on it. He sold the house for a large profit. The disillusionment set in after he moved to Chicago and sought a house in the suburbs. "I had to pay much more for less house," he complains.
A $19,000-a-year associate law professor at Boston College began looking last March for a $30,000 four-bedroom house within walking distance of his job and in a neighborhood with reasonably good schools. He and his wife are still looking—even though they have raised their limit to $40,000. "We're in a bind," says the professor, who now pays $275 a month for a six-room apartment three miles from his work. "We cannot find a decent house, and we cannot afford to stay in an apartment."
Finding a place to live today is a trauma for millions of Americans. During the past two years, the price of houses has risen almost twice as fast as the over all cost of living. The average new house in the U.S. now sells for about $26,000; the same one would have cost $20,200 in 1966. In many suburbs, prices have jumped a good deal faster than that. At the same time, the overwhelming demand for apartments has pushed up rents, and vacancy rates have fallen to the lowest level in twelve years.
"We shape our buildings; thereafter they shape us," observed Winston Churchill. The crisis in housing is beginning to warp American life. Housing is by far the largest expense for most families; when that cost soars, something else in the budget has to give. Most of the 40 million U.S. residents who move each year must now make difficult compromises: they must pay higher prices than they had budgeted, or accept less living space, longer commuting or lower school standards. The problem affects almost everybody—the rich in luxury apartments, the middle class in suburban subdivisions, the poor in festering slums. In order to make bigger down payments, many middle-class families are forced to borrow from relatives. The poor feel the pinch most of all, since they pay a larger share of their incomes for housing than better-off Americans do. Housing costs the average U.S. family 15% of its income, but those below the poverty line spend 35%.