In December 2013, Shaun Donovan, U.S. Secretary of Housing and Urban Development, gave this warning:

"We are in the midst of the worst rental affordability crisis that this country has known."

Few paid attention to the warning, and of those who did, even fewer would have guessed that the crisis had only just started.

Today's financial news was a double punch-in-the-gut for the working class of America.

The U.S. homeownership rate was 63.4 percent in the second quarter, down from 63.7 percent in the previous three months, the Census Bureau reported Tuesday. It was lowest reading since 1967.
...
The rental vacancy rate fell to 6.8 percent from 7.1 percent in the first quarter and 7.5 percent a year earlier. It was the lowest rate since the 1980s, according to the report. The median asking rent was a record $803 a month.

To put it simply, marginal homeowners continue to be pushed out of their homes and into the rental market where they will be forced to pay ever higher rental prices.
The thing that is unsaid in this article is that the housing bust that start in 2006 is ongoing and continues to get worse even though the news media stopped talking about it years ago.

To make matters worse, rents rose last year at their fastest rate since 2008 and are "set to accelerate" at "the fastest rate...since the 1980s.".
To sum this up, the "worst rental affordability crisis that this country has known" in 2013 has gotten much worse the last two years and looks to get worse at an accelerated rate in the near future, and no one seems to care.

Well, almost no one cares. New York City Mayor Bill de Blasio recently took the unprecedented step of freezing rents for a year. The fact that total homelessness jumped by 29 percent in New York might have had something to do with the decision.
People are fleeing these expensive city and those that stay live differently.

And as Americans leave, people from abroad move in to these bustling cities to fill the vacant low-skilled jobs. They are able to do so by living in what Stoll calls "creative housing arrangements" in which they pack six to eight individuals, or two to four families, into one apartment or home. It's an arrangement that most Americans just aren't willing to pursue, and even many immigrants decide it's not for them as time goes by, he said.

Nearly 21 million rental household, or about half of all rental households, spent 30% or more of their income on rent in 2013.
11 million households spent at least half of their income on rent and utilities, up 37 percent from 2003.
These cities aren't always very expensive cities. Miami and New Orleans rank near the top in percentage of income going to rent simply because wages are so low.

However, the story doesn't end there because of one hidden item in the article.

Home values have jumped 34 percent since reaching a bottom in early 2012, making purchases more expensive for entry-level buyers.

Home prices are increasing at 13 times the rate of wages. The Housing Affordability Index dropped 12% in just the first five months of 2015.
Fewer people owning homes should mean less pressure on prices to move up, but that's not what's happening. For that reason we need to look deeper into this story.
How is it possible that the price of a commodity (i.e. housing) can increase so much faster than the ability of people to afford it?

Enter the investor.

In many markets, the housing recovery has "largely been driven over the last two years by buyers who are not as constrained by incomes -- namely the institutional investors coming in and buying up properties as rentals, and international buyers coming in and buying, often with cash," Daren Blomquist, vice president at RealtyTrac and author of the report, said in an interview.

In other words, inequality is driving this trend. The wealthy see housing as an investment, while the working class see it as a necessity. Blackstone alone owns 150,000 homes that it bought in order to rent to working people. Most of those homes were foreclosures, which Blackstone then rents to people who were often previously foreclosed on. Wealthy foreigners are also buying up tens of billions of dollars worth of houses every year.
It's not a coincidence. Housing is one of the most heavily, taxpayer subsidized sectors of the economy. The public benefits fall disproportionately upon the wealthy, while the poorest are left out almost entirely.
The rational decision would be to stop publicly subsidizing an asset class with disproportionately high prices that is causing general suffering amongst the working class. But politics dictate that this won't happen.

Much of the drop in homeownership can be attributed to the lack of good jobs for Millenials, which has led to a drop in household formations among the young.

According to the work of the individuals at NDR, it appears household formations from the millennials is about 3 million formations behind previous generations’ rate-of-structure.

High home prices are making it impossible for the young generation to buy even starter homes. First-time homebuyers only accounted for 26% of home sales in January. The percentage in a normal market is around 40% according to the NAR.

The Landlord's Game

When it comes to housing, we've been trained to think of it illogically. We cheer every uptick in home prices without ever thinking about the consequences. We think of home prices like we do stock prices, when we should think of housing prices like food prices - something we can't do without.
No one cheers when food prices go up, except for the farmer. So no one should be cheering when the price of housing goes up except for the landlord. The problem is that we all started thinking of ourselves as landlords. The housing bust should have shown us otherwise.

English economist David Boyle may have predicted this about England, but the same economic forces exist in America.

Rising property prices will kill off the middle classes within 30 years and create a vast ‘impoverished’ proletariat, a government adviser has warned.
It would leave Britain with a ‘tiny elite and a huge sprawling proletariat’ who have no chance of ‘clawing their way out of a hand-to-mouth existence’, he said.
He said the traditional middle classes would need three or four jobs just to be able to pay soaring rents.

It turns out that this is happening not just in Britain, but in America, and not in the future, but right now.
To put this into perspective, let's examine the minimum-wage worker and how market-rate rents work.

In Maryland, a minimum wage earner would have to work 135 hours per week to afford a two-bedroom apartment, the equivalent of more than three full-time jobs.

In case that wasn't clear, three full-time jobs means 24-hour a day workdays. As you might imagine, the rent affordability crisis one of the elements leading to ever increasing homelessness.
Instead of renting becoming a stepping stone to home ownership, it has now become a barrier.

Consider the game Monopoly. Everyone has played it.
You go around and around until one person has all the property and money. It's a simple enough game to understand.

Did you ever wonder who created the game? The game was created by Elizabeth Magie. At the time it was called the Landlord's Game.
Magie designed the game to be a "practical demonstration of the present system of land grabbing with all its usual outcomes and consequences"