Millions of Americans are already shut out of buying a home, and the cost of buying one continues to rise.
In past decades, it was common to find a house that cost roughly three times a buyer’s annual income. But that ratio has skewed sharply since the COVID-19 pandemic, with home prices up a whopping 47% since early 2020. Median home sales prices last year were about five times the median household income, according to tabulations in a newly released report by the Harvard Joint Center for Housing Studies, and there are signs it could get worse.
The double whammy of high prices and high mortgage rates has “left homeownership out of reach to all but the most advantaged households,” says Daniel McCue, a senior research associate at the center.
It’s really a global problem and I do think it’s an inevitable problem of capital saturation.
After decades of economic growth and peace, the developed world has an overabundance of wealth.
Some of that wealth chases the stock and bond markets and private equity and things like art and crypto and that’s fine. Those are proper channels to act as a sponge to absorb wealth.
But some of this wealth is chasing real estate and commodities, which makes the basic necessities of life unaffordable.