What Is Making Housing So Unaffordable?

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We have a housing affordability nightmare taking place right now. Real estate, real estate is a part of people’s financial portfolio. And I’m not just talking people that are investing in real estate and renting out properties, whatever it may be. Many people consider their residence or primary residence a

a cornerstone of their financial plan. And to be quite honest with you, I discourage that. Discourage that. I’ve talked about that throughout our history on air. I’ve written columns about it, real estate reality, and a myriad of other reasons why I don’t like people to think of things in that fashion, in that manner. I want you to think of your home as, you know, if you have mortgages, like an installment plan purchase. Yeah, sure.

Sure, there’s going to be many a times, if you’re lucky, lucky, I mean, you take a look at how home prices have gone up. People are able to sell their home for more than they bought it for, sometimes a lot more, a lot more. But you never go into it thinking that that’s the case. That’s not what you’re planning on. It is your home. It’s not an investment vehicle. And again, I explain this to people when it comes to

you know, upgrades that they may want to put in. If you’re doing that, you’re doing it for yourself. Don’t do it for, hey, I might be able to sell it for more money down the road. It’s a vicious game that you’re going to get into. On the flip side of that, where we’re at right now, and I want to go through some of these numbers when it talks about housing affordability here in this country. Record in April. And this is again, mortgage rates, mortgage rates were high, it was at 7 .5.

and April. Price in April was 6 .3 % compared with the year earlier month. It’s the second straight month that the national index jumped at least 1 % over its previous all time high. Some more numbers here. Markets are at an all time high. Still, you know, some of them.

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one of the least affordable housing markets in US history for both home ownership and renting. Home prices are now 47 % higher than they were in 2020. Think about that for a second. 47 % more. This is based on median household income. That’s extraordinary. And we’ve talked about other forms of inflation. 47 %

percent higher for renters. They’re 26 percent higher. Half of all renter households, 22 million, spent more than 30 percent of their income on housing, which is considered cost burdened. 12 million of those households spend more than half their income on rent. Homeowners, 20 million are considered cost burdened by their monthly payments. All of those cost burden levels represent records.

Home owners facing sharp increase in insurance premiums talked about as well. That’s up 21%. Okay. One of the things that I’ve seen over the years is that people oftentimes they get they get formal fear of missing out when it comes time for shopping for a home. And it can be a frustrating process.

It can be a very frustrating process when you’re looking for a home and there’s multiple people looking to buy and they’re bidding on homes and they’re selling even above market. And I get that. But you have to have your limit. You do not want to be house poor. Like I said, it’s an installment plan.

purchase and you can try to convince yourself, well, you know what, I’ll be able to refinance rates will come down later on this year. we, we all have enough stress and problems in life that you don’t want your resonance to be one of those things. And I’ve seen this happen on many occasions, many occasions, people getting formal, the lead up to the

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the financial crisis, I’m watching the price of homes where I was living in Southwest Florida skyrocketing and I gotta get in, gotta have it, gotta have it. Do you really? Do you really have to have it? Wouldn’t it be better maybe to wait? Wait a little bit. Again, the concept that prices cannot come down, that’s patently absurd. I think we would have learned that by now. And again, we are really short.

on supply at this point in time. I think that there’s maybe, I actually had the numbers here in regards to supply. Inventories, a 3 .7 month supply. A healthy market, a balanced market is six months and we’re not there yet. That’s what we need to get to where things will start to come down to some degree. I try to explain this to people all the time. I said, you know, I’m gonna buy a house, okay? I don’t care.

I don’t care if they say, my God, you bought it at this and the price dropped. I don’t look at it that way. My bill hasn’t changed. My bill hasn’t changed. Okay, maybe my insurance has gone up whatever it may be, but you need to take all of these things into consideration and not look at your home as some sort of investment vehicle or stock that trades over time. And listen, I get it.

Again, it’s tough, a lot of young families out there and what they’re paying as far as rent is concerned and how that’s become unaffordable as well to some degree. You’re going to have to wait this out. You’re going to have to, you’re going to thank me. Okay. You’re going to thank me. Don’t get pushed into something that you can not afford. It will affect everything else. Everything else in your life, your ability to go on vacations, your ability to save.

for your future. Homemade, like I said, I’ve written about this and what a home can mean to people. And my home, and I’ve had a few, I’ve had a few, just sold my home. And I love this place. It’s a beautiful place. And I put a lot of work into this place. It means a lot to me, okay? But it’s basically memories. It’s where you create memories.

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And that can be anywhere. That can be anywhere. You want to get a place, and I understand that the grand desire, you want to do all of these things, but don’t be FOMO when it comes to buying a home. Wait until you can find something that you can afford. You’ll get there. It will eventually, it will come to, the market will come to, mark my words. It cannot remain like this, okay?

The idea out there that’s pushed by a lot of quite frankly, in my opinion, disingenuous real estate agents and that industry in of itself, forcing up the prices of many things and trying to convince you to buy things that you cannot afford. Don’t do that. Don’t do that. Wait, things will work its way out. The way and how expensive it is here in this country. I get it. I get it. And you may be tough.

living in that rental for a period of time. Stick it out, okay? I know I’m addressing a lot of younger people out there with this message. It’s important, you’ll thank me later. Watchdog on wallstreet .com.