TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
100% this. It’s not that costs rose as much as it’s that salaries didn’t increase.
In the late 70s around 23% of US corporate revenues went to pay salaries. By 2012 that had fallen to 7% - in other words, just before neoliberalism really took off almost 1/4 of the money workers spent buying goods from US companies was almost directly back in workers’ pockets, whilst by 2012 less that 1/14 of what workers spent buying goods from US companies ended back in workers’ pockets.
All that excess money that doesn’t get recycled back to workers anymore has got to be pooling somewhere.
It’s both. If the price of homes aren’t reflecting an affordable price, you have to ask, who’s buying them? It’s not the average family - it’s corps sucking up homes as investment assets, driving up prices to sell to each other and the “lucky” family or two that get to empty out their retirement fund just to have a place to live. That’s not reflective of a natural, reasonable increase. That’s the result of hedge funds destroying the housing market for the rest of us, just to pad their bank accounts.
That may be true in some of the lower priced Midwestern markets, but I sell real estate in Boston and I don’t see big corporate interests in the single family or owner occupied 2-3 family market. as much as big corporations have ruined a lot of things in this country, I don’t think we Dan just wave our hands and say “corporate buyers” and explain away our housing market problems.
We have a confluence of decades of exclusionary zoning and restrictions on building that make meaningfully adding to the supply of housing almost impossible. We have a huge deficit of qualified workers in the building trades, in part because all the work dried up after the great recession and people left the field and in part because we’ve pushed more and more kids to go to college. We have a mortgage system that’s nearly unique worldwide that allows homeowners tremendous advantages in keeping their housing costs low, but inversely provides tremendous disadvantages to having them move around more often and free up housing stock (so lots of aging singles and couples in big houses better suited for young people with kids). We have a society that’s bizarrely fixated on single family living even though we desperately need more density in most markets. And we have the problem of wage stagnation. None of those things are directly attributable to corporate ownership of large numbers of houses.
I’d love for there to be some silver bullet where we could just say “disincentivize corporations from owning small housing stock” and solve the problem, but it’s nowhere near that simple.