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For many renters, that price tag puts homeownership out of reach.
Yes, the Feds half-pointmortgage rateslash in September helps.
But it wont fix the housing affordability problem on its own.
Heres why the rate cut wont solve theaffordability issues for renters hoping to buy homes.
But rewind the clock just a couple years.
The same loan cost 3.22% at the start of 2022 and 2.65% in January 2021.
Over the next year or two, rates may gradually float back to 4.5% to 5%.
But dont expect them to plunge back to those all-time lows in the foreseeable future.
That means they grew faster in thelast four yearsthan in the entire decades of the 1990s and the 2010s.
Sure, home prices have dipped a little over the last year.
But most homeowners are content to simply wait out the current high interest rates and slight dip.
And you know what happens when high demand meets low supply.
Material costs have also shot through the roof.
Steel products leapt 77%.
Stone and gypsum materials rose 48%.
And so it goes.
Again, dont expect relief any time soon.
Spiking Property Tax Bills
Higher home prices mean higher property tax bills.
The average tax on single-family homes grew 4.1%.
All of these factors add to homeowners monthly payments, further driving homeownership out of reach for many Americans.
Barriers to New Construction
Greater housing supplyleads to greater affordability.
When too many buyers all compete for a tiny supply of housing inventory, prices surge.
Which is one reason homeownership is so much more affordable in Texas than in California.
And thats despite drastically smaller populations in the three Texas cities.
Home prices in California rose 5.1% last year, to a jaw-dropping $773,363.
Meanwhile, the population in Texas surged by 473,453 last year according to the Census Bureau.
California actually lost population, bleeding 75,423 residents.
If cities and states want more affordable housing, they needmore housing supply.
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