Rates are low and mortgages are cheap, so why isn’t homeownership on the rise in America?
The reason that the market isn’t booming the way it should be is in short, due to lack of inventory and increased home prices. Since 2012, home prices increased about three times the price of wages. Although the unemployment rate is the lowest it has been in 50 years, and American paychecks are growing, this isn’t enough to allow the majority of Americans to live out the American dream of homeownership.
We are seeing many markets that are shifting to buyer’s markets because of the fact that people simply can’t afford the price of the homes in their area, causing homes to sit on the market longer. According to Tappe, “typically, when buyers remain on the sidelines, housing prices fall in response to lower demand. But that’s not happening at the moment because the homes on the market are priced higher than where people are willing or able to buy.”
There simply isn’t enough inventory at an affordable price to cast a net of consumers who would sustain a boom of homeownership.
Some of the reasons for lack of affordable housing is due to a shortage of construction workers, high material costs due to tariffs on lumber, steel, and aluminum. Another factor that could be stalling homeownership is the 2017 Trump tax reform that was initiated which limited tax-deductible mortgage interest to loans of $750,000, and state and local tax deductions are capped at $10,000. This could give some prospective homebuyers pause in certain high-tax areas.
If you are looking for a home in San Diego, please reach out to me as I work with some of the best lenders in the business and my team and I is committed to making homeownership a reality for you! Contact me here! to set up a buying or selling consultation.
There simply isn’t enough inventory at an affordable price to cast a net of consumers who would sustain a boom of homeownership.
Some of the reasons for lack of affordable housing is due to a shortage of construction workers, high material costs due to tariffs on lumber, steel, and aluminum. Another factor that could be stalling homeownership is the 2017 Trump tax reform that was initiated which limited tax-deductible mortgage interest to loans of $750,000, and state and local tax deductions are capped at $10,000. This could give some prospective homebuyers pause in certain high-tax areas.
If you are looking for a home in San Diego, please reach out to me as I work with some of the best lenders in the business and my team and I is committed to making homeownership a reality for you! Contact me here! to set up a buying or selling consultation.
Source: CNN
