Is There A Solution To Housing Unaffordability?

[Michael Carbonare]

𝐓𝐡𝐞 $𝟏𝟏𝟐,𝟎𝟎𝟎 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧: 𝐂𝐚𝐧 𝐀𝐦𝐞𝐫𝐢𝐜𝐚𝐧𝐬 𝐒𝐭𝐢𝐥𝐥 𝐀𝐟𝐟𝐨𝐫𝐝 𝐚 𝐇𝐨𝐦𝐞?

In 2015, you needed about $55K a year to afford a home. Today? $112K.
That’s double in less than a decade while median incomes barely moved.

This isn’t a “high mortgage rate” problem. According to recent Fannie Mae calculations,
it will take one of three things, or a combination of them to get back to affordable housing in America:
Housing prices would need to drop 38%
Median household income would need to rise 60%
Mortgage rates would need to fall to 2.35%

This widening gap is why creative investing strategies are becoming more important than ever. They allow everyday people to participate in real estate without needing six-figure incomes or perfect timing.

The data tells the story. The opportunity lies in how we respond to it.

[Jay Hinrichs]

Quote from @Henry Clark:

OP the answer is in your chart.   The spike occurred in 2020 to 2021.  Same period as Covid impacting the economy.  Affordability will naturally go back down.

1.  Lumber tripled in price.  Covid shutdown mills especially in Canada.   Also large forest fires slowed or shutdown Canadian logging in areas.  
2.  Hardware used in housing was restricted with made in China.   Stopped at the ports since ports were shut down due to Covid and strikes.  
3.  Cement costs have significantly increased due to Covid.  Plants shutdown.  
4.    Labor shortage due to COVID government payments.  
5.  Businesses received COVID payments injecting financing into new projects.         
6.  People received COVID payments and purchased goods causing inflation.

7.  Contractors lost money on fixed price build contracts.  They had to recoup with higher pricing.  

Believe the government injected over a years worth of GDP into the economy.

Think of a Bull Whip.   Long wind up, then a pop at the speed of sound.  We are in the Pop section.  It will take a couple years for the above to unwind.

Covid had more dollars chasing limited resources.  During this time we were building a new Storage location.  We needed 20 truckloads of cement to pour.  Pretty big right?  We were small potatoes.  Only got 5 loads per day, plus late in the day.  Always want to pour early.

Prices will go down.  Say 2 years starting now.       

But we have a new issue on the horizon.  China is economically imploding and they also have become to expensive.  They are no longer a low cost producer.  The supply chain will need a decade to find new sourcing.  Or lower cost.  

Answer to affordability is to have more people live in the unit, step down in type of housing, or move to affordable housing.  My neighbors son is 2 years out of high school and just bought a house using his money.  Combination of right professional choice (hvac) and buying in a lower cost market (small town).  

One can go to many nice cities in Iowa and buy a perfectly livable house ( newly renovated even) for under 200k.. I know I fund them for flippers.. its an issue of where folks want to live.