High housing costs have caused 13 million fewer babies to be born in the United States between 1990 and 2020, according to a new study from the University of Toronto, published on Nov. 12. Economist Benjamin K. Couillard reckons that the deterrent effect of expensive rents, home prices, mortgages and so on accounts for 51% of the precipitous drop in America's fertility rate over those 30 years.
"Large families are more cost-sensitive, and so rising housing costs disincentivize fertility by disproportionately reducing the value of having a large family," says Couillard's study.
Why We Need to Know
Of course, people have long thought that high housing costs have affected the size of families. But it's never previously been possible to prove a causal link, nor to measure the impact of one on the other.
Couillard's work appears to do both of those. And it should provide a way of gauging the effectiveness of future housing policies on the fertility rate.
Our Declining Fertility Rate
In July, NPR summed up just how dramatic the fall in America's fertility rate has been:
"The total fertility rate is a small number with big consequences. It measures how many babies, on average, each woman will have over her lifetime. And for a population to remain stable — flat, no growth, no decline — women, on average, have to have 2.1 kids. In the U.S., that number is 1.6, and dropping."
The Centers for Disease Control (CDC) confirms that the fertility rate continues to fall. "The general fertility rate in the United States [in 2023] decreased by 3% from 2022, reaching a historic low," it says. "This marks the second consecutive year of decline, following a brief 1% increase from 2020 to 2021. From 2014 to 2020, the rate consistently decreased by 2% annually."
Those apparently small annual decreases have a massive cumulative effect on America's demographics. Were it not for immigration, the country would likely be facing a declining gross domestic product and a productivity crisis owing to labor shortages.
Housing Costs Rising Faster Than General Inflation
Couillard's study concentrates on rents rather than homeownership costs and uses Census Bureau data to track changes in renters' payments. However, Realtor.com® says, "rents ... are highly correlated with home prices and mortgage payments," so housing costs generally are covered.
" ... data from the U.S. Bureau of Labor Statistics shows that rents rose 149% nationally from January 1990 to January 2020, outpacing the overall cumulative inflation rate of 103% over the same 30 years," says Realtor.com.
So, housing costs rose at a significantly faster rate than general inflation. And that made the expenses involved in keeping roofs over their heads a much bigger part of the household budget for single people, couples and families.
What did housing costs squeeze out of many of those household budgets? Babies.
Policy Solutions
When high housing costs merely inflicted financial pain on their constituents, legislators in states, cities and on Capitol Hill seemed content to shrug. It was the free market in action, and struggling is part of the human condition, at least for most.
But now lawmakers have hard evidence that high housing costs are affecting the fertility rate and, therefore, the American economy. Will they take steps to address the issue, and what can they do?
"America's housing shortage grew to an all-time high of 4.7 million units, according to a new Zillow® analysis of recently released Census data," said Zillow in July. "This deepening housing deficit remains the prime driver of the nation's housing affordability crisis."
Here's one proposal. "To boost fertility, we not only need a larger housing stock, but a different housing stock," Realtor.com® senior economist Jake Krimmel told The New York Post this week. "We need to build more housing, particularly larger housing units and apartments that can accommodate growing young families."
Other ideas we've covered recently include relaxing local zoning laws to allow affordable apartment buildings and manufactured homes in areas that currently ban them.
