I’ll be brief. A lot of experts are saying that we need to build more housing; increased inventory will bring slower price growth so that homes remain affordable to most of the people (hopefully). As I mentioned in a previous post (can’t find it, you’ll just have to trust me 😈), that doesn’t necessarily track with the price of homes in new construction in the area.
Why am I bringing this up today? The National Association of Home Builders (NAHB) released a report called, “Priced Out.” Here’s the short version: 69% of all US Households cannot afford to buy a median priced new construction home. Let that sink in, for a moment. Over 2/3 of the country cannot afford new build. Prices are not going down. Median price of new construction (nationally) is $412,500. For every $1,000 price increase, 117,932 households lose the ability to qualify for a loan.
The median new construction price in California is $543,767; the Income needed to qualify for a traditional mortgage is $120,445/year. As things currently stand, 4.17M Californians can afford to purchase a median priced new construction. That’s pretty cool…until you realize that 9.2M Californians cannot…But wait, there’s more. The median sales price for all homes in the state of California is $796,570 🤦♂️ I can’t even…
So, all of this begs many questions, but the first is: where do we go from here?
There are no easy answers. It’s requires getting uncomfortable. It’s going to require a hard look at past discriminatory housing policies and how we can change current inadvertent discriminatory housing policies moving forward. There are a lot of innovate strategies throughout the country and over the next several Tuesdays, I’ll be exploring them. It’s not enough for me just to point out the problems, it’s time to be a fixer.