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Is the dream of owning a home in the U.S. becoming more of a fantasy for many? A revealing report from ATTOM highlights the growing disparity between median home prices and the average incomes of Americans. With mortgage rates skyrocketing beyond 7% and a tight housing inventory, the market is becoming increasingly challenging for many prospective buyers. High interest rates are significantly impacting the housing landscape. Join us as we delve into the data, discuss what this means for millennials, and explore the changing dynamics of American home ownership in 2023. Don’t forget to like, share, and subscribe for more insights! #HomeOwnershipCrisis, #USRealEstateTrends, #MillennialHomeBuyers
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[00:00:10] Good afternoon. So we have this situation where things are not going well with the housing market. It’s not a crash, anything like that, but I don’t know if you’ve noticed, but mortgage rates have gotten a little bit ridiculous and that’s causing affordability problems. Now there’s different arguments. We could say that there’s a supply issue and all this stuff, but let’s just focus on the affordability issue today. And I saw this article and I wanted to bring it to your attention.
[00:00:46] It’s from CBS News. It says, Homes unaffordable in 99% of the nation for the average American. Well, that’s not good.
[00:00:55] That’s a problem. And so we’ll just kind of go through the article and you can see what they’re talking about. It says, the typical American cannot afford to buy a home in a growing number of communities across the nation according to common lending standards. Well, that’s kind of a bad thing because you need a mortgage. Most people will finance with a mortgage, especially if the rates are cheap. But right now I think we’re headed towards eight. 8% on a 30 year fixed is not a good place to be for affordability, says that’s the main takeaway from a new report from real estate data provider Adam. Researchers examined the median homes prices last year for roughly 575 US. Counties and found that home prices in 99% of those are beyond the reach of the average American income earner. I added American who makes $71,214 a year.
[00:01:52] So this gels perfectly with what I see in my business. I have young couples working very, very hard to buy their first house or maybe even to try to move up from their starter home and they are completely locked out of this market. They’re good people, great credit, trying to be fiscally responsible, and they just cannot afford a decent home.
[00:02:20] There are homes out there, but they’re usually fixers, fixer uppers, which are not where young professionals really want to be, it says. Housing experts point to a couple of trends driving up housing costs. Mortgage rates have topped 7%, added hundreds of dollars per month to potential house payment. At the same time, homeowners who are locked in at lower mortgage rates during the pandemic have opted not to sell out of fear of having to buy another property. At today’s, elevated rates depleting the supply of homes for sale. Now the last couple of episodes we’ve talked about supply. I don’t think that’s going away anytime soon, the lack of supply.
[00:03:00] Unless those short term rental owners, those people that are the mom and pop investors, Wall Street instead, if they decide to sell, if the pain is too much, if occupancy is too low, then perhaps we will see some supply come to the market.
[00:03:17] But we’re really in a spot here. Fed’s continuing to raise rates or continuing to hold rates. There’s no cheap money and that’s not going to help rates.
[00:03:31] For the longest time I was uncomfortable with the idea that we had rates too low, 3%. Three and a half percent, 4%. It was just overstimulating the housing market, like to a degree that wasn’t okay at the time. It was argued that there was supply chain and disruptions and that that’s why houses weren’t being built and that’s why things were so expensive. I never really felt that was the case. I thought that we were making it so that everyone could afford a very nice home. Nothing wrong with that, except for the fact that if it’s detached from, like if the money’s too cheap, you get into this.
[00:04:12] It says prices will remain unaffordable as long as mortgage rates continue to rise. Fairweather said that’s. Daryl Fairweather, he’s a yeah, yeah. Prices will remain unaffordable as long as mortgage rates continue to rise. And even if they stay the same, it’s pretty much unaffordable for the vast majority of it, says Adam’s. Data adds to a growing body of real estate research in recent years that highlights the lack of affordable housing.
[00:04:47] And I’ve argued for a long point in time that, look, what you think of as affordable housing is not what people talk about when they say they’re going to build affordable housing. Those affordable housings are set asides. Those are things that have nothing to do with the average person being able to afford a home. If you build 50 houses in a neighborhood, you aren’t fixing the problem with supply and you’re also not fixing the problem with affordability. I mean, it’s more troublesome than that. First time homebuyers who are often the most sensitive to interest rates have had to postpone their home buying dreams. Well, this level of mortgage is affecting everyone. I have young professionals that could easily afford a new move up home that can’t in this environment with 8%, they were down at around six, they gave up.
[00:05:39] It’s bad. It says the older buyers with more cash on hand can buy down interest rates or they can absorb a higher monthly payment and are still buying homes across the country. Well, that may have been the case when this came out, but that’s not the case right now, at least not in St. Louis. Things are starting to grind to a halt and as we see the rates continually move up, it’s getting worse and worse now.
[00:05:59] It is good. In this article, we have a definition of unaffordable. It says Adam defined unaffordable as someone who must devote more than 28% of their income toward paying for a particular home. Factoring in a mortgage payment, homeowners insurance and property taxes. The typical home price today would require 35% of someone’s annual wages.
[00:06:20] And so you can see that’s a problem and I think it’s even higher. There was a teacher that wanted to buy a house and this woman was looking for a house for $100,000. And in St. Louis right now, you’re not going to find anything for a family for $100,000. And she told me, she said, this is so ridiculous. I go to work every day, and I can’t afford a home. I don’t understand. And that’s what we’re seeing in the market right now, and it is terrible.
[00:06:49] So I saw that article. I thought it was kind of interesting.
[00:06:55] What are you seeing? I mean, are you one of those people that are like, well, it’s too bad that you can’t afford the house. That’s the way it’s going to be. Welcome to capitalism. Or are you like, hey, the government’s going to fix this somehow? Even though the government might have caused this problem in the first place? I’d be interested to know your thoughts. Put them in the comments section.
[00:07:17] I mean, I just I think this is terrible. I find this to be absolutely awful and would like to see things work themselves out. I just don’t think it’s with all the things going on right now, I just don’t see it happening anytime soon. I hate to be a downer, but that’s what I see with that. I’m going to head on out. Thank you for watching. Thank you for listening, and I’ll catch you on the next one.
[00:00:46] It’s from CBS News. It says, Homes unaffordable in 99% of the nation for the average American. Well, that’s not good.
[00:00:55] That’s a problem. And so we’ll just kind of go through the article and you can see what they’re talking about. It says, the typical American cannot afford to buy a home in a growing number of communities across the nation according to common lending standards. Well, that’s kind of a bad thing because you need a mortgage. Most people will finance with a mortgage, especially if the rates are cheap. But right now I think we’re headed towards eight. 8% on a 30 year fixed is not a good place to be for affordability, says that’s the main takeaway from a new report from real estate data provider Adam. Researchers examined the median homes prices last year for roughly 575 US. Counties and found that home prices in 99% of those are beyond the reach of the average American income earner. I added American who makes $71,214 a year.
[00:01:52] So this gels perfectly with what I see in my business. I have young couples working very, very hard to buy their first house or maybe even to try to move up from their starter home and they are completely locked out of this market. They’re good people, great credit, trying to be fiscally responsible, and they just cannot afford a decent home.
[00:02:20] There are homes out there, but they’re usually fixers, fixer uppers, which are not where young professionals really want to be, it says. Housing experts point to a couple of trends driving up housing costs. Mortgage rates have topped 7%, added hundreds of dollars per month to potential house payment. At the same time, homeowners who are locked in at lower mortgage rates during the pandemic have opted not to sell out of fear of having to buy another property. At today’s, elevated rates depleting the supply of homes for sale. Now the last couple of episodes we’ve talked about supply. I don’t think that’s going away anytime soon, the lack of supply.
[00:03:00] Unless those short term rental owners, those people that are the mom and pop investors, Wall Street instead, if they decide to sell, if the pain is too much, if occupancy is too low, then perhaps we will see some supply come to the market.
[00:03:17] But we’re really in a spot here. Fed’s continuing to raise rates or continuing to hold rates. There’s no cheap money and that’s not going to help rates.
[00:03:31] For the longest time I was uncomfortable with the idea that we had rates too low, 3%. Three and a half percent, 4%. It was just overstimulating the housing market, like to a degree that wasn’t okay at the time. It was argued that there was supply chain and disruptions and that that’s why houses weren’t being built and that’s why things were so expensive. I never really felt that was the case. I thought that we were making it so that everyone could afford a very nice home. Nothing wrong with that, except for the fact that if it’s detached from, like if the money’s too cheap, you get into this.
[00:04:12] It says prices will remain unaffordable as long as mortgage rates continue to rise. Fairweather said that’s. Daryl Fairweather, he’s a yeah, yeah. Prices will remain unaffordable as long as mortgage rates continue to rise. And even if they stay the same, it’s pretty much unaffordable for the vast majority of it, says Adam’s. Data adds to a growing body of real estate research in recent years that highlights the lack of affordable housing.
[00:04:47] And I’ve argued for a long point in time that, look, what you think of as affordable housing is not what people talk about when they say they’re going to build affordable housing. Those affordable housings are set asides. Those are things that have nothing to do with the average person being able to afford a home. If you build 50 houses in a neighborhood, you aren’t fixing the problem with supply and you’re also not fixing the problem with affordability. I mean, it’s more troublesome than that. First time homebuyers who are often the most sensitive to interest rates have had to postpone their home buying dreams. Well, this level of mortgage is affecting everyone. I have young professionals that could easily afford a new move up home that can’t in this environment with 8%, they were down at around six, they gave up.
[00:05:39] It’s bad. It says the older buyers with more cash on hand can buy down interest rates or they can absorb a higher monthly payment and are still buying homes across the country. Well, that may have been the case when this came out, but that’s not the case right now, at least not in St. Louis. Things are starting to grind to a halt and as we see the rates continually move up, it’s getting worse and worse now.
[00:05:59] It is good. In this article, we have a definition of unaffordable. It says Adam defined unaffordable as someone who must devote more than 28% of their income toward paying for a particular home. Factoring in a mortgage payment, homeowners insurance and property taxes. The typical home price today would require 35% of someone’s annual wages.
[00:06:20] And so you can see that’s a problem and I think it’s even higher. There was a teacher that wanted to buy a house and this woman was looking for a house for $100,000. And in St. Louis right now, you’re not going to find anything for a family for $100,000. And she told me, she said, this is so ridiculous. I go to work every day, and I can’t afford a home. I don’t understand. And that’s what we’re seeing in the market right now, and it is terrible.
[00:06:49] So I saw that article. I thought it was kind of interesting.
[00:06:55] What are you seeing? I mean, are you one of those people that are like, well, it’s too bad that you can’t afford the house. That’s the way it’s going to be. Welcome to capitalism. Or are you like, hey, the government’s going to fix this somehow? Even though the government might have caused this problem in the first place? I’d be interested to know your thoughts. Put them in the comments section.
[00:07:17] I mean, I just I think this is terrible. I find this to be absolutely awful and would like to see things work themselves out. I just don’t think it’s with all the things going on right now, I just don’t see it happening anytime soon. I hate to be a downer, but that’s what I see with that. I’m going to head on out. Thank you for watching. Thank you for listening, and I’ll catch you on the next one.