Two years into the pandemic, rundown bungalows command bidding wars, buyers keep snatching up places they have never seen, and homebuilders can’t find enough cabinet doors for everyone who wants a new home. The median price for an American home is up nearly 20% in a year. The for-sale inventory is at a new low. And the hopeful buyers left on the sidelines have helped drive up rents instead.
“My pessimistic view is that the economy is perfectly capable of running with unaffordable housing,” said Daryl Fairweather, the chief economist at Redfin. This was evident over the past decade, she said, when affordability worsened even as the economy continued to grow. And that reality has enabled politicians and the public to largely neglect the issue of housing affordability.
“It’s really hard for an owner-occupier to compete with the amount of money that’s flowing into this region,” said Dan Immergluck, a professor at Georgia State in Atlanta. There, even in a Sun Belt market with robust new housing construction, supply still can’t keep up with demand. Working-class households on the cusp of homeownership before the pandemic may now need another five to 10 years to play catch-up, said Ralph McLaughlin, chief economist at Kukun, a company that tracks real estate investment activity. The days of one-earner households buying a decent-quality starter home anywhere in the U.S. may be over, he said — unless that one earner is a high earner.
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