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I’ve been seeing posts on social media about unaffordable the housing market has become (in terms of home price to income ratio). Many people who don’t already own a home are locked out of the home ownership market because the monthly mortgage payment and down payment required has increased a lot faster than the median wage since 2020.
What impacts will unaffordable housing have on politics? Do you think we might see a shift from identity-based politics to politics more focused on economic inequality?
The real monthly median mortgage payment has been remarkably stable for decades, so I expect that home ownership will not remain "unaffordable" for long.
That link shows mortgage rates going from 1500 (approx) in 2020 to 2500+ in 2023, while in the same time frame wages rose from 45k (approx) to 48k (approx). In order to restore affordability some combination of the following would have to happen:
So when you say you don't think that home ownership won't remain unaffordable for long how do you think the affordability will be restored and how long will that take to happen?
It depends. If mortgage rates remain high, I expect real home prices to fall eventually, at least relative to income. Because home prices are in part a function of mortgage rates, and we have already seen some evidence of that happening.
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