JPMorgan Chase has announced that it intends to deploy more than $750 billion into housing through 2035. The plan includes financing the construction or preservation of one million affordable housing units and helping 500,000 people buy homes, including 200,000 first-time buyers.
Those are impressive numbers. They are the kind of numbers that make headlines, get repeated at conferences, and convince people that someone has finally arrived with a solution large enough to match America’s housing problem.
But I have a question.
If we divide $750 billion by one million homes, we arrive at $750,000 per home. Is that what America needs—one million new homes costing three-quarters of a million dollars each?
Of course, that is not exactly what JPMorgan is proposing. The $750 billion is not one giant construction account. It includes mortgages, debt, equity, grants, homebuyer financing, and money used to preserve existing affordable housing. Some of that capital may finance the same property more than once during the next decade, and preserving an apartment does not add another unit to the national housing supply.
Still, the arithmetic raises a useful question. Are we solving a shortage of homes, or are we expanding the amount of money moving through a housing system that continues to produce homes too many people cannot afford?
Is More Housing Finance the Same as More Housing?
The announcement says JPMorgan will increase mortgage lending by more than 40 percent, hire 850 home-lending advisers, work with communities on zoning and permitting, and consider new loan products for modular and manufactured homes. There is a lot in that plan worth applauding, especially the recognition that factory-built housing may be part of the answer.
Yet a mortgage does not create affordability. It finances a price.
If the home costs too much, making the loan easier to obtain may help some buyers, but it does not address why the home became unaffordable. If land, regulations, impact fees, labor, materials, infrastructure, insurance, taxes, and interest have pushed the finished price beyond what a working household can carry, are we solving the problem by offering that household a larger or longer obligation?
And if billions are used to preserve existing affordable units, that may be important and necessary, but should those preserved units be counted as progress against a shortage measured in missing homes? The residents already live there. The building already exists. We may be preventing the situation from getting worse, but are we actually reducing the supposed deficit?
Where Are the Four Million Missing Households?
In an earlier article, I asked who the four million households behind America’s housing shortage really are. Most are not homeless, and they are not waiting in empty fields for houses to be delivered. They are already living somewhere.
They are adult children still living with their parents, families doubled up under one roof, renters who cannot make the leap to ownership, and older homeowners who would like to downsize but cannot find a suitable home at a sensible price. They are occupying bedrooms, apartments, townhouses, and single-family homes throughout the country.
That makes me wonder whether we have a shortage of structures or a shortage of movement.
The housing ladder used to work because one household’s move opened a place for another. A first-time buyer purchased a starter home. The seller moved into a larger home. Later, that family downsized, releasing the larger home to the next generation. Today, high prices, mortgage-rate lock-in, taxes, and the absence of desirable lower-cost alternatives have caused many households to stay exactly where they are.
When the ladder stops moving, every rung feels crowded. Economists call the result a housing shortage, but is it possible that part of what they are measuring is a mobility shortage, an affordability shortage, and a shortage of realistic choices?
Do We Need One Million Homes—or the Right One Million Homes?
America may very well need another million homes. It may need several million. But what happens if we build them in the wrong places, at the wrong prices, or for households already well served by the market?
Does a $750,000 house help the 30-year-old still living in a childhood bedroom? Does a luxury apartment help the teacher, nurse, factory worker, or firefighter who cannot afford to live near work? Does another large suburban home help an older couple who wants a smaller, accessible home without leaving friends, doctors, and church behind?
Supply matters, but supply is not one interchangeable product. A thousand high-end homes do not necessarily answer a shortage of entry-level homes. Five hundred market-rate apartments do not automatically solve a shortage of workforce housing. A development located an hour from employment may add units to the national count while adding very little to the lives of the people supposedly represented by that count.
Perhaps the first question should not be, “How many homes can we finance?” Perhaps it should be, “Which households are unable to move, what can they afford, and what kind of home would allow the housing ladder to start moving again?”
Could Offsite Construction Change the Question?
JPMorgan’s willingness to consider loan products for modular and manufactured homes caught my attention. For years, offsite construction has been discussed as a way to build faster, reduce waste, improve quality, and make labor more productive. Those advantages matter, but only if the savings survive the entire trip from the factory to the buyer.
What good is factory efficiency if it is absorbed by expensive land, duplicative reviews, slow permitting, unnecessary transportation complications, site delays, and financing systems that still treat alternative construction as unusual? What good is producing a home faster if the buyer cannot obtain an appraisal or loan that fairly recognizes the product?
Capital could help change that. It could support factories, developers, infrastructure, and mortgage products designed around smaller homes, infill development, accessory dwellings, manufactured housing, and modular communities. It could help turn underused land into attainable housing and give older homeowners a place to move, releasing existing homes for younger families.
But will it?
Or will most of the money flow toward the projects that are largest, safest, easiest to underwrite, and most familiar to the financial system? Will we celebrate the total dollars deployed without asking how many genuinely attainable homes were added, who moved into them, and which households were finally able to take the next step?
Gary’s Observation
$750 billion is a remarkable commitment, and one million affordable homes is a worthy goal. But large numbers can create the appearance of precision while hiding the question that matters most.
Who is the housing for?
America’s housing shortage may not be a simple shortage of roofs and walls. It may be a shortage of homes at prices that match incomes, a shortage of financing that recognizes new construction methods, a shortage of places for older owners to downsize, and a shortage of opportunities for younger households to begin.
If we spend the next decade moving $750 billion through the existing system without changing what that system produces, we may reach 2035 with more housing finance, more expensive homes, and the same four-million-home shortage being quoted in another headline.
Before we ask how much money America can deploy, shouldn’t we ask what kind of housing would actually get America moving again?
