There is currently a supply deficit in the housing market. Although housing is only a small part of our collective economy in the United States, it has been known to upset the larger economy in very large ways. For example, it is hard to forget about the housing crisis of 2008. That situation involved banks allowing people to take out loans for homes that they could not realistically afford at the time. The practical application in 2008 was that people could not afford their housing payments, and would end up losing their house. That entire situation applied large amounts of financial stress on an individual level to a large amount of Americans at the time.
With housing costs soaring, it is becoming difficult for people to afford homes in America. There are multiple possible implications of this. Many Americans will flock to apartment living rather than choosing to pay on a mortgage. Some others will choose to live in smaller homes while a non-insignificant population will still choose to pay on a more expensive mortgage loan, spending less money on other goods and services. Whatever happens, the overall economy will likely worsen due to decreased consumer spending. Although it is not a guarantee by any means, unless the housing supply deficit is improved, the United States economy is at risk.
Thorsby D. Dec. 15, 2021. What To Expect From the Housing Market in 2022. Retrieved from https://realestate.usnews.com/real-estate/articles/what-to-expect-from-the-housing-market
The expense of housing has been a concern for many in the past years. However, something should be done about this before it becomes a crisis, like in 2008 since there are many people who are looking for affordable housing. I am curious to see what will be implemented to try and fix this before it gets worse.
ReplyDeleteIt is going to be interesting to see which type of housing this rising generation of adults will choose to favor in the coming years as a result of the significant increase in housing costs. I personally think that demand for larger, more extravagant homes will go down and that smaller homes will become the more dominant housing choice, as the desire for permanent living is still an important factor.
ReplyDeleteMy friend and I suspected a housing bubble, mainly due to the fact that buying rates increased slowly while there was high unemployment during the pandemic. Housing prices had increased as well, which deepened our suspicion.
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