Yahoo Finance 5 Reasons the Home Prices in Your Area Are Rising
In 1978, the Government Accountability Office reported an all-time high median selling price of $44,300 in America, according to Yahoo Finance. 45 years later, in Q4 of 2023, that figure was more than $417,000. Here are the reasons why we are experiencing rising home prices.
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1. Seniors are Downsizing Less
According to the Urban Institute, more than half of the 94.5 million homes with three or more bedrooms in America are being occupied by two or by a single occupant — many of whom are aged 62 or older. This means that there are fewer homes to choose from that are suitable for families with children.
2. Real Estate Investors
Large-scale institutional investors often immediately buy out affordable homes as they hit the market, preventing access by new buyers. This compounds with the first point to create a situation where families are unable to find affordable starter homes.
3. Supply and Demand and the Time Commitment
A 2022 Survey of Construction by the Census Bureau found that it takes approximately 9.6 months to fully build a single-family home, according to CNBC. Then there are the issues of zoning regulations and land-use restrictions, which conflict with the obvious solution to the supply and demand imbalance of simply building more homes, as further explained by CNBC.
4. The COVID-19 Pandemic
Millions of Americans being stuck at home and spending less money in general contributed to inflation, which includes home prices. Moreover, the disruption to the supply chain resulted in higher home construction costs. Inventory issues caused specifically by the pandemic help explain why home prices have risen a staggering 54% since 2019, according to The Washington Post.
5. Beneficial Federal Proposals Aren’t a Guarantee
President Biden recently announced “a plan to cut housing costs, boost supply and expand access to affordable housing,” as reported by CNBC. Additionally, he proposed a mortgage relief credit which would provide a tax credit to first-time homebuyers and families selling their starter home. However, it’s always possible that the plans will be shut down or halted in some way as was Biden’s student debt relief plan, which was rejected by the Supreme Court.
This article originally appeared on GOBankingRates.com: 5 Reasons the Home Prices in Your Area Are Rising
