The US Housing Market is a Mess – Super Cheap Mortgages of the COVID Era Are Mostly to Blame This Time
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December 18, 2024
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This article from International Corporate Rescue was first published on December 10, 2024. The entire publication is available at: https://www.chasecambria.com/site/journal/article.php?id=1703.
Homeownership has long been a cornerstone of the American Dream, serving as a primary means for middle-class families to build wealth. For generations, this formula provided financial stability and was often the main source of retirement wealth for many Americans. However, in recent years, homeownership has become increasingly stressful for many households, especially first-time buyers, as rising costs and limited housing availability have made this dream harder to achieve.
Over the past two decades, several factors have contributed to a shifting housing market. Underinvestment in new housing, demographic changes and well-intentioned policies have disrupted the once stable market, creating unexpected demand booms and supply shortages. As a result, home prices have soared, making it more difficult for average Americans to afford a home relative to their income. The situation worsened further in 2022, with the number of home sales plummeting to levels not seen since the Great Recession, as homeowners with low mortgage rates opted to stay put, reducing inventory and exacerbating affordability challenges for prospective buyers.
The housing market, while often seen as an individual exchange of homes, has a much broader economic impact, involving industries like homebuilding, real estate, mortgage services and home improvement. The health of the housing sector is often a reflection of the overall consumer economy, and currently, the market is divided between a thriving high-end sector and a struggling lower-to-middle market. This imbalance is contributing to financial anxiety for many Americans, as the cost of shelter, whether buying or renting, remains a significant economic burden.
Reprinted with permission from International Corporate Rescue, Volume 21, Issue 6.
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December 18, 2024
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