Title: The Housing Affordability Crisis in America: What’s Behind It and How We Can Solve It
In recent years, housing affordability has become a pressing issue for many Americans. Factors beyond high mortgage rates are affecting the ability of potential homebuyers to purchase a new home. According to experts, the disconnect between wages and housing costs, as well as tight supply in the housing market, are key contributors to this crisis.
Almost four years ago, a household earning $59,000 annually could afford a new mortgage without spending more than 30% of their monthly income and with a 10% down payment. However, that is no longer the case today. While the typical household income has increased to about $81,000 a year, wages have not kept up with rising housing costs. The typical mortgage payment on the typical home in the U.S. has nearly doubled since January of 2020, making it increasingly difficult for potential homebuyers to afford a new home.
Tight supply is another reason behind the housing affordability crisis. Fewer homes available on the market for would-be buyers keeps real estate prices elevated, and in some local markets, the shortage leads to even higher prices. The number of new housing units built in recent years has been declining, and experts point to restrictive land-use and zoning regulations as a key factor in this low supply.
To address the housing affordability crisis, experts suggest that local policymakers need to lower barriers for builders by easing land-use and zoning regulations. This includes factors like the maximum height of buildings or the minimum lot size. By allowing more housing construction, particularly in high-demand areas, prices can be kept in check.
While local zoning rules are typically decided at a local level, the federal government can provide financial incentives to encourage the development of more affordable housing. By working together to increase housing supply and address the underlying factors of the housing affordability crisis, we can create a more accessible and equitable housing market for all Americans.
Source link
