Table of Contents
Key Highlights : Housing
The difficulties of an average person with an average income have increased due to the rising housing prices in recent times. Now, it is highly necessary that strong steps be taken to control home prices, which seem to be reaching unsustainable levels.
There are additional factors contributing to the rapidly growing prices of houses, such as home loan rates, home prices, and increases in average income. By implementing changes in these areas, it may be possible to control the pace of house price growth to some extent.
At present, there aren’t as many houses available as there were before the 2008 financial crisis. The shortage of available houses indicates that the U.S. is falling behind its average housing requirements.
House prices have rapidly increased over the past four years, and rising home debt rates in 2022 are making buying a home even more impossible, especially for first-time buyers. The American dream of homeownership is facing a crisis at this moment, and significant changes in the market are required to revive this dream. According to experts, to make home prices affordable again, several changes are necessary, similar to those before the 2020 COVID-19 pandemic.
Specialists suggest that implementing changes such as a 40% reduction in home purchase prices, lowering the home debt rate from 6.8% to 2.4%, or increasing the median household income to $129,096 could potentially restore home purchases to previous levels. These adjustments would likely make homeownership more attainable for a broader range of individuals and families, thereby stimulating demand in the housing market. Additionally, they could contribute to a more stable and balanced housing market, fostering economic growth and stability in the long term.
This data highlights the challenges that average-income individuals encounter in affording home loan rates and purchasing homes amidst rapidly escalating prices. Home purchases driven by rapidly rising home loan rates have surged to levels not seen in several decades. As a result, only high-income individuals have the financial capacity to afford house purchases, while median-income individuals find themselves unable to do so.
The housing situation is unlikely to see improvement in the near future.
According to the expert, this situation is not improving quickly. In the coming time, home loan rates can decrease, which may lead to an increase in the demand for buying a home. It is believed that in the coming time, the Federal Reserve may ease its financial interest rates campaign, resulting in home loan rates likely to fall. On the other hand, the fall in home loan rates may accelerate the purchase of houses and once again affect house prices.
The only solution to this problem is to consider building more houses. Since the 2008 recession, the home market has declined considerably. Data also show that there are 5.5 million fewer houses available in the US in 2021 compared to average. Therefore, it is important to build new houses to meet the demand.
It has been announced that new policy proposals have been issued by the White House recently. The purpose of these proposals is to address the current need for low-budget housing. This has prompted local governments to conduct necessary research on revising building construction laws to facilitate the construction of affordable homes. Additionally, the federal government will fully support changes to zoning laws at the local level.
In the future, when the local government changes its zoning laws to facilitate the construction of low-budget houses, it may lead to a decrease in home loan rates. In such a scenario, families will also be able to realize their dream of owning a home. Currently, neither house prices nor home loan rates have decreased, making it very difficult for average-income individuals to purchase a home