How expensive homes are impacting the economy
The American Dream is becoming less and less attainable for the working class. “Starter homes” really need to be flipped in many markets, and affordable housing seems to be mobile homes in some cities. How is this lack of low-priced housing affecting the overall market?
People Are Priced Out
Lenders are done with hastily qualifying buyers who can’t truly afford a home. Although prices are higher than ever, many lenders are becoming more and more stringent with their standards.
People who can’t afford homes aren’t able to get them. Real estate agents across the country are reporting that they have clients who are pre-qualified for loans but still unable to get a home because none of the homes available are in the client’s price range.
It’s a Buyer’s Market
Since houses are so expensive, buyers who can afford the going rate are pickier than ever. If you’re paying more than a house is worth anyway, you’re going to want to get the best house possible.
Homes that would usually sell quickly are lingering on the market for months or even years because buyers want perfect homes. Since buyers are overpaying, they are demanding new construction with all the bells and whistles. Even amongst millennials, there is a trend of buying first homes that are more luxurious
Jobs Are Affected Too
Although more buyers are opting for new construction, there’s still not enough construction happening to sustain all of the expansion and hiring that was done in the industry to handle the housing boom that is currently dwindling to an end.
Since consumers don’t make enough for rising home prices, there isn’t high enough demand to keep the construction and housing markets sustainable. It seems like a Catch-22 situation, but maybe the average cost will even out in due time.