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Yes, housing prices are high and interest rates are high, and while interest rates will come down, housing prices are high because of a supply problem.
Lowering standards for home loans, a traditional Democrat solution, is not going to address the problem. It will just expose the market to more risk (the last time we did that, the sub-prime crisis happened) and create greater competition for the limited supply of housing already on the market.
And that’s likely to send prices even higher.
Having the government subsidize student loans sent the cost of college soaring. Government intervention in the housing market, in the name of making housing more accessible, has raised the cost of housing.
How do we deal with the supply issue? There are the silly answers, like building in national parks, or the urban Dem answer, to abolish zoning regulations so every street can have its own housing project run by its own gang of choice.
But we can track some of the factors that sent housing prices soaring and those include the regulatory costs and the supply costs. Like the cost of lumber. The Trump admin has tried to open up more areas for logging (a more helpful solution than building in national parks) and cutting the cost of lumber would make new housing stock more viable.
More logging would make for cheaper lumber and that would make for lower construction costs. So would reducing some of the ridiculous regulations that make construction so expensive.
Much of the housing stock is off the market because people are reluctant to move because they’re unable to buy. Clearing that Catch 22 logjam would go a long way toward dealing with housing stock availability. And there’s a role for looking at how tax policy plays a role there. Lower government revenues would be more than offset by more housing stock and a viable housing market.
We can also tax foreign buyers investing in American real estate at higher rates.
Finally, and this is counterintuitive to the socialist impulse which too many Republicans have become infected with, but getting the government out of helping people who can’t afford homes buy them would reduce competition and prices.
Leave your own thoughts and suggestions in the comments.
They have been doing a quite a lot of Logging in Our Area here in Siskiyou County and the Klamath National Forest these last few months unlike under Clinton(Bill and his wreckless Forest Plan 9 we do need Lumber for New Homes and not the wreckless ideas from Sierra Clubs dreamy eyed screwballs
The main issue is hedge fund companies like BlackRock and foreign investors buying up houses and turning the US into a nation of renters like Canada and Europe.
Buying a home has always been cheaper than renting…
The problems are multi-faceted… credit, savings and income… with no desire to have a family… or no desire to maintain a home…
The younger generation wants to travel… travel all over the world… constantly… brainwashed into stupidity…
Even pursuing senseless higher education degrees that have no future…
With the average medium home price being @ $410k…
Whatever happened to supply and demand in a free market system?
Redwood used to be cheap enough to use for lumber in building houses in the 1950s.
Companies like Blackrock and State Street target neighborhoods. They start buying homes at above market prices, driving up valuations. They then sell those homes to a subsidiary, making a profit. Home values rise again, driving up property taxes. Long time residents can no longer afford to live there so they sell and end up being renters in many cases. Think your local town council and city government isn’t working hand in hand with Blackrock and co.?
It’s more than just lumber… electrical, insulation & plumbing products have gone crazy too…
Before covid… 12/2 wire was $43 a roll… today it sells for $139… down maybe $20 bucks, from it’s high… but still way too expensive…
Prices have skyrocketed on everything… even food… many items are nearly double what they were before covid…
Consumer prices just really haven’t dropped since covid…
Construction costs are nothing compared to the taxes and other non=market forces.
Bringing in millions of illegals is what creates a housing shortage. Send them home and leave our beautiful forests alone.
BlackRock and Blackstone own less than 1% of the housing market. The problem is regulation. For example look at California. A year after the fire and there have been less than 10 homes with building permits. Now take this and look at housing development. If you owned land and wanted to develop it in Fremont local development fees would add roughly an additional $160,000 to the average $850,000 house. This prevents houses from being built due to regulation cost. If one looked at any local government impact fees and the like are charged for housing development. In liberal states they are outrageous and make housing unaffordable, curtailing building which limits supply.
More logging And less local bureaucratic tyranny And less purchases by foreign nationals
Eliminating the tariffs on lumber imported from Canada would bring down home prices.
The benefit of so many illegal aliens being willing to work construction jobs in the U.S. is that it brings down the costs. Yes, that involves a tradeoff. Thanks, Captain Obvious.
Some jokes write themselves. We now have a President who is promising checks of $2,000 per citizen with the money coming from the tariff revenue. We need to replace DEI with an E requirement: economics. You cannot use the money to reduce the (absurdly high) federal deficit and give that same money as a bonus to citizens.
Yes, the GOP can reduce costly regulations to bring prices down. A Trump administration official has argued tariffs are not taxes. Some “stuff” you cannot make up.
Housing and many other high prices are the result of debasing the $$$$. As long the government puts its finger on the scale, on the false promise of of good governance or regulations. The unaffordability always will remain unsolved. .
Unfortunately, it is easy to demonstrate Trump wants easy money. He claims interest rates are too high and the Fed needs to lower them. How do you attempt to lower interest rates? By increasing the supply of money. What is “always and everywhere” the cause of inflation? When the government had the Fed print money to buy the Treasury’s bonds during Covid, it bought the bonds with newly created money. It was Trump—look it up if you don’t think it’s true–who called the last stimulus check of $600 “measly.” (No word yet if we were going to also get our chicks for free.) Hmmm, what would have happened if the Fed increased the money supply even more?
Anyway, housing prices cannot be up. President Trump recently said—look it up–that the price of everything is down. (Yes, I know most of the money is not “printed” but instead created electronically.)
Actually, an alternative to the shortage lumber is ICF (Insulated Concrete Form). ICF has many desirable advantages over lumber.
1- Faster build time,
2- fire proof,
3- energy efficiency (R-23 vs R-19 or less for wood),
4- better sound insulation properties,
5- reduced carbon footprint,
6- is structurally stronger than a wooden home,
7- reduces construction costs and
8- offers design flexibility that wood can not match.
Plus an ICF home will last for more than a 1000 years whereas a wooden home would be lucky to last a third of that in the best of environments (a dry temperate climate.)
Need to make houses earthquake proof also.
That’s easily down. For example, City National Plaza in downtown Los Angeles, originally known as the Arco Towers and Plaza, is a 33-stories tall building built on 2-story tall shock absorbers and plates that allow for lateral motion.
I personally saw it first hand and viewed the detailed structural engineering drawings (as part of a contract engineering company there on business, I had a need to know that info.)
Homes can be built with the same concepts in mind although, such a home would cost more to build. But, a regular home can be “earthquake proofed” with a few simple material and design changes.
Supply of affordable homes could be increased by creative use of factory manufactured homes including modular units that are built efficiently in factories utilizing many technologies not practical in stick-built homes.
Constructions costs are not the primary problem. Even if they were, most of the construction cost is
1. Financing, 2. Permitting, 3, Labor. – Not in numerical order, but in order of importance to a successful venture.
If wood went down 50%, it might lower the cost enough to build in some quality into the crackerjack construction.
As for Private Equity firms such as Blackrock. It’s true they own very little of the market. But they drive home prices right now: Especially in tight neighbors and new subdivisions.
Who do you think is bombarding us Real estate investors with cash offers? It’s not Tom, Dick, or Harry.
Real Estate, of course, is not just home prices. SFR = Single Family Residence. (Which for this post includes any 1-4 unit building.) If you want to know the real story of real estate in the nation, you should research the price of ag land, or start following commercial office space.
That’ll put some hair on your chest, and also add some gray to your hair.
Won’t help me, I’m already a grayback.
The price of SFR’s has gone up BECAUSE of government interference in the market. And not just loan guarantees, and endless freebies for any illiterate who hates our guts.
A big driving force of higher home prices is, of course, debasement of the currency. Another is the 30 yr mortgage … aka ‘The price is whatever you’ve got in your pocket. Another is limiting development.
But the biggest, and most unseen villain is picking winners and losers in the economy.
If government was not deciding who wins and who loses, businesses would have to go out into locations where there might be weather, no gay bars, or – gasp – white people.
Silicon Valley, NY, Chicago, LA, and Boston … all have excuses. But what about Dallas? Houston? Atlanta? There’s no reason for prices to shoot up the way they have.
Except.
Drive through Dallas, and you’ll see that there’s a serious problem with SFRs. And it also looks like inequality etc.
What you’re seeing is the result of: Crime, regulation, criminalizing landlords, legalizing property vandalism, ruthless taxation of SFR property regardless of ownership, and many other value DEPRESSING practices.
To overcome these problems, developers must flee the city, and they must build larger and more ostentatious properties.
That excludes the riff raff without ‘redlining’ the development.
Oh, and back to construction costs: Do you really think a 1000 ft2 property is even 1/3 of a 3000 ft2 property? It isn’t. Get a calculator and go to Home Depot. Sure, the lumber costs are related, but that ignores the roads, sewer, water lines, and even the foundation. What’s an extra concrete truck after the first one?
And then there’s property taxes.
Don’t get me started on Silicon Valley property taxes. Frickin’ Santa Clara County cost me over $30k last year just dragging their feet. And that’s ‘grandfathered’ – scraping the lot and building a new property would be nearly $90k in annual property taxes.
That. Is. Insane.
Do you think working Joes can afford that???
The government created the vast majority of this crisis, and the only way to fix it – sadly
is for the whole economy to go to near collapse
to reset home values in accordance with wages.
Oh, I forgot: Home values should be 3 years annual income. mortgage loans should be no more than 1/3 of income, and should last no more than 15 years. Values should rise no more than 4% on average over 20-30 year periods.
Anything else is either debasement of currency or artifical inflation of prices (pump and dump).
Just a few observations. I’ve left a lot out. Feel free to add more.