Affordable Housing Crisis
If you are trying to buy a home right now, you will notice that home values are consistently increasing, but what does that mean for you? As a buyer, are you able to get the perfect home in this market? As a renter, is it safer to stay put or move to a new home? These are all questions that are ringing hard in the heads of those looking for a home, and we are here to answer some of these questions. The housing market is in the midst of a housing crisis, but what can we do to get through it? If you have noticed, the demand for housing is increasing day by day. So, why is the supply for housing remaining stagnant?
The Collapse of the Market:
Homebuilding collapsed during the market crash in 2008, and it has been slow to recover from this. The construction of high-end homes and apartments made a comeback first when the economy started to recover, but the construction of affordable housing lagged. In Cookeville, we started to see an increase in supply before the pandemic began. However, ever since Covid-19 came into question and slowed down production again, we have seen a shift in the housing market, and it seemed to have gone from one extreme to another. Specifically, in Cookeville, housing prices have increased immensely, which causes concern amongst those currently in the market for finding a home. Prices for homes sold in the bottom fourth of the market are currently selling for nearly double than the homes in the top fourth percent. Meaning that these homes are up nearly eight percent per annum.
Many may be thinking to themselves, “Well, okay. I guess we will have to rent for a little while longer.” Unfortunately, this may make for an expensive living as well. For the people who rent specifically in Cookeville, did you know that rent has increased roughly four percent over the past few years? Did you know that rent increased even during the pandemic?
Many families who decide to rent are those who cannot keep up with the inflating market, and rising rents leave these families with very little to live on. Currently, one in four renters typically pays more than half of their monthly income on rent, which leaves very little for grocery expenses and any other bills. This also leaves renters without enough money to put back. To put it in perspective, the average renter can only afford to save $500 per year.
The rise in housing prices has put the economic opportunity of homeownership out of reach for many families, especially those of color. Homeownership rates for Hispanic families are 48% and for black, it is 42%, and this is a level that has not been this low in decades. The affordable housing shortfall is not just decreasing savings and increasing the wealth gap. It is creating a gap between those who are mid-lower class further away from those at the top of the economic ladder and even further from economic opportunity.
From Here On Out:
So, we have addressed that there is a crisis in affordable housing, but how are we going to fix this? Well, we all know that the costs of the building have significantly increased, so we have to acknowledge these costs and constraints. If these costs and constraints are acknowledged, we can begin working on a change in affordable housing. Federal policymakers will likely take the “top-down” approach in fixing this issue, but there are many decisions that are made on a local level that can impede the development of affordable housing.
All in all, the affordable housing crisis is a real thing, and it leaves many individuals with questions on whether they will ever be able to afford a home without having to put the majority of their monthly income into a mortgage payment. Over time, home prices will go down, but the timing of this happening is unknown due to recent events regarding the new Covid variant.
It will take time, but preparing yourself beforehand is a necessity for the process. If you are looking to sell your home, now is the time to do so. However, finding a home is just as important in today’s market. If you have any questions or concerns, give us a call. Our agents will be able to talk you through your worries and prepare you for the search. Our buyers agents are all wonderful people, and they will work hard in finding you the perfect home! Don’t worry, be happy, and leave it to us!
Zandi, M. (2021, April 23). The U.S. is in the midst of a housing crisis. What can be done about it?https://www.inquirer.com. https://www.inquirer.com/business/affordable-housing-poor-homes-rent-apartments-shortage-20210423.html.