Pandemic Ripple Effects Exacerbate Affordable Housing Shortage
When covid-19 hit, the world shut down, and we are still feeling the effects. The cost of building materials spiked, and wages for construction workers surged, so the time it took to build a house lengthened. As a result, the United States is short 3.8 million homes, and the median house price has risen 40 percent since January 2020. The median house price is now 7.5 times the median income. That means “starter homes” are nearly impossible to find in many cities.
Rule of thumb: Many financial advisers say that home buyers should spend no more than 30 percent of their monthly household income on a mortgage. Assuming a 20 percent down payment, there are only four major cities in the U.S. where the average family can purchase a median-priced home and follow that rule: Detroit, Michigan; Memphis, Tennessee; Oklahoma City, Oklahoma; and Tulsa, Oklahoma. In all other metropolitan areas, families must either shop for something below the median price, not buy a home, or buy something they probably cannot afford.
Bitter affliction: Many are hoping that more houses will become available once the Federal Reserve starts cutting interest rates, but prices are unlikely to fall much unless the nation finds a way to encourage new construction in suburbs and cities. This is unlikely to happen until the covid-19 lockdowns are far behind us.
Until then, Americans need to take the late Herbert W. Armstrong’s advice to heart by preparing “to greatly reduce your standard of living!” Americans have enjoyed the most prosperous living standard of any nation in history, yet those blessings are being stripped away because the U.S. has turned away from the God who made it great and gave it its wealth in the first place.
Learn more: Read “Prepare to Reduce Your Standard of Living.”