I was asked by a reader today whether I thought the American economy was healthy I said that the economy is doing much better based on the social outcome data. Anyone who says otherwise is not telling the truth. There is one big problem. The one big problem is housing because there is not enough, and because the Federal Reserve has raised the interest rates again and again. Mortgages are now running about 6.5%. This article describes the issue well.
I see three trends coming together. One, The conversion of office buildings into apartments. Two, The collapse of coastal real estate across the country, which will have enormous economic effects. The alarm will be insurance companies ceasing to offer insurance. Fourteen companies have already left Florida, Farmers most recently. Unless you pay full price one cannot buy a property and get a mortgage if you can’t get insurance. Added to that will be the disasters. Three, The decline of the real estate in cities in the Southwest like Phoenix, because of high temperatures and lack of water. Four, the increase of real estate prices in the Northern states as climate change intensifies and people migrate into those Blue states.
Homes in Rialto, California. Credit: Kyle Grillot / Bloomberg
Buying a home in California slipped further out of reach as interest rates climbed and scarce inventory bolstered prices.
Only 16% of households could qualify to purchase a median-priced single-family home in the second quarter, the California Association of Realtors reported Friday. That’s down from 19% in the first quarter and 17% a year earlier.
The state faces an affordability crisis that threatens to hamper growth in the economy and population. People and companies have left California, or chosen not to move there, because housing is so much more expensive than in most of the US.
“In the long run — three or four years — we’ll see tight supply and lower affordability will trim the competitiveness of California if nothing is done to increase the supply of housing,” Oscar Wei, deputy chief economist for the state Realtors group, said in an interview. Nationally, more than a third of households could afford to purchase a $402,600 median-priced home, according to the report.
For an existing single-family home at California’s median […]
I cannot afford any of the home-owners policies available in the area in which I live! They want as much as 21% of my monthly income when combined with the Auto insurance which I MUST have. I may just have to do without it !
laura
on Saturday, August 12, 2023 at 3:48 pm
housing is becoming a inter-generational asset. second generation immigrants who have saved will buy and families will hold on to houses in good locations. people are leaving blue state cities for more space and less tax. mostly red states. blue states will lower taxes. it will become harder to buy a house because demand will not decrease and foreign money will buy available homes in prestigious locations. eventually new cities will form. climate change will not be a major factor. people will seek out sunshine and natural beauty. people will avoid decay.
I cannot afford any of the home-owners policies available in the area in which I live! They want as much as 21% of my monthly income when combined with the Auto insurance which I MUST have. I may just have to do without it !
housing is becoming a inter-generational asset. second generation immigrants who have saved will buy and families will hold on to houses in good locations. people are leaving blue state cities for more space and less tax. mostly red states. blue states will lower taxes. it will become harder to buy a house because demand will not decrease and foreign money will buy available homes in prestigious locations. eventually new cities will form. climate change will not be a major factor. people will seek out sunshine and natural beauty. people will avoid decay.