Why America's housing crisis has hit a new inflection point

[brooklynite]

Axios

When an immovable force meets an unstoppable object, bad things tend to ensue. That is what is happening right now in the U.S. housing market, with homebuilders stuck in the middle.

Why it matters: The immovable force is the millions of millennials hitting their prime child-rearing years and looking for a place to live. The unstoppable object is the Federal Reserve, determined to bring inflation down using the main arrow in its quiver: interest rates.

The standoff is creating a housing affordability crisis. Builders are faced with the dilemma of whether to construct houses that buyers may need help to afford, given 7%+ mortgage rates, or to hold back and therefore make long-term housing supply issues worse.

Driving the news: New data out Tuesday morning showed housing starts in August fell 11.3% from July. That was disproportionately driven by a drop in multifamily units like apartments and condos, but starts of single-family homes fell by 4.3%, too.

[bucolic_frolic]

1. They should go on a commercial/neighborhood renovation-conversion crusade aimed at the middle class

and quit all the gentrification. With the cost of insurance, maintenance, and roofs, McMansions won't be very affordable again.

[Initech]

2. Another crises created by the absolute failure of that economic policy known as trickle down.

We don't work to enrich our lives, we work so people like Jeff Bezos and Elon Musk can make more billions. So many of the problems we face right now can be traced back to this bullshit.

[Stargazer99]

3. It amazing how many people are so uneducated that they don't see this

keep them so damn busy trying to survive with 2 or 3 jobs to meet the bills and not having enough time to think and observe what is going on

[Initech]

8. I was floored when I saw Bob Iger makes $139 million a year...

While his average employee makes like $50,000 a year on average. That’s not a salary, that’s large scale theft.

[jmbar2]

4. We need a national "Marshall Plan" to build affordable housing

Perhaps they could focus on green homes, and utilize the new youth corps.

[Johnny2X2X]

5. Build more reasonable homes

The idea every family needs a 3500 square foot or bigger home is a problem. I think if builders focues more on the 1500 square foot variety they could get a lot of buyers.

And interest rates being high is temprorary. Do not let high interest rates stop you, you can refinance in a year or 2.

[NutmegYankee]

9. +1

I live in a 1961 Cape Cod house. They are in high demand still, despite age, because they are affordable and practical. It's time to go back to building more homes like mine.

[Johnny2X2X]

10. McMansions

Yeah, the builders are greedy too, their margins on these McMansions are all they care about.

[Renaissance Man]

6. A mortgage crisis to align with a student debt crisis.

This mortgage crisis and student debt crisis are eventually going to mushroom into something this country does not want to live through.

Another issue, other than raising interest rates, are the hedge funds and large investment companies (like Zillow, Redfin, etc.) that have got in on the action and are buying up houses and reselling them at a markup that wouldn't be happening had those companies not been in existence. Coupled with rising interest rates, there is going to be a large portion of Gen Z buyers that are not going to be able to access affordable single family homes.

This will create a domino effect of these same buyers needing to access rentals, which will only provide landlords and real estate investors with the incentive to jack up rents because they know these same people can't afford mortgages.

This is what disaster capitalism has wrought.

[Johnny2X2X]

7. Biden solved the student debt crisis

Shh. Don’t let the GOP know.

But it’s been solved by his new repayment plans.

[MiniMe]

11. When I bought my first house, my interest rate was 12%

That was considered a good rate at that time. That was back in the 80's. My first credit card had an interest rate of about 8%. Now credit card interest rates are 29.99%. That is why I pay my credit cards off every month. I am lucky that I can afford to do that. I also try to keep my purchases low. Things change over time

[William769]

12. I am stuck between a rock & a hard place right now

Because of this bullshit.