Back on the early 2000's the government decided that not enough people of certain demographic groups owned homes, and that home ownership was going to be a panacea for these groups. The government decided that the best way to fix this problem was to lower the requirements for obtaining a mortgage, while simultaneously guaranteeing these mortgages so that the lenders faced virtually zero risk of default. I'm not going to go into the details here, but suffice it to say that the standards held by the mortgage industry prior to this big change, were supported by plenty of data that demonstrate that people who qualified under the previous standards (certain credit score/DTI/etc) had a high probability of being able to pay back their loans. Strangely enough, the looser loan requirements led to increased defaults, trying to bury these bad loans in better loans inside of mortgage backed securities, and the like, which led to lender/bank failures, and chaos in the housing market.
One result of this mess was that the number of new houses being built dropped off of a cliff, and remained below the trend line until 2020/2021. This resulted in our current reality where we have a shortage of homes in the US. We're talking about having over a million fewer housing units that we currently need, without regard to future needs. Add this to the fact that cities across the country are making it virtually impossible to build affordable housing, and the reality that most cities don't have the infrastructure to accommodate replacing single family homes with multi family homes, and you get a sense of the problem. One area where this is very noticeable is how it has affected rental properties. As we know from econ 101, when supply goes down, and demand goes up, prices for the commodity rise. Rents are currently so high as to be unaffordable for many people. Speaking on unintended consequences, rent control is s shitty idea.
So, into this situation where decent, affordable rental property is hard to find, and cities are making it difficult to build more, we add one more factor. Immigration. Some folx have decided that what will really fix this situation is to introduce millions of immigrants to the picture. As if placing more demand for a scarce commodity will somehow not make the price for that commodity continue to rise. But as long as we can blame the greedy landlords, and cap the amount they can charge for rent while raising taxes and lowering services, what could possibly go wrong. Let's not forget that VRBO's and STR's are taking rental stock out of the market as well.
I guess that condemning immigrants to high priced, substandard, overcrowded rental housing, is one way to show them compassion.
2 comments:
In my area, where I've been for about 13 months now, having fled the People's Republic of Illinois, new homes are being built in quite a few areas...rental apartments as well. This is due to the fact that this state is among the top five or six form inbound migration from blue states. But from what I can tell, prices are up there a bit higher than I'd like to spend, even if I was in the market. The townhouse we rent is more than affordable for us, but we do worry when advancing age forces us to relocate to a place with no stairs to climb every day. Will we be able to find a place which won't break the bank? We'll see.
Prices are compounded by the artificially affected supply chain due to moronic Covid policies imposed by morons. The markets still haven't recovered to its pre-Covid levels and it's not guaranteed they will.
As to the hordes forcing their way in to the country in conflict with our own self-determination, the likelihood of government handouts to house a significant percentage of these people is very high, if not already happening.
Art,
While that may be the case in your local market, the reality nationally is that we are short over a million homes from what should have been built to stay with the historical trend. Hey, up here you can get a crappy one bedroom in a less desirable part of town for 1,500 a month.
The affects on the supply chain and materials pricing may have been the result of COVID measures, but the reality is that materials prices are what they are. I’m more concerned with how cities are hitting builders with absurdly high “permit” fees which make affordable new construction impossible. Craig
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