DAY ON SOCIAL MEDIA. >>> A NEW STUDY OUT OF HARVARD THAT HAS DONE MILLIONS OF AMERICANS ARE SIMPLY BEING PRICED OUT OF HOME OWNERSHIP. >> THE JOINT CENTER FOR HOUSING STUDIES SAYS HOMEOWNERS AND RENTERS ARE STRUGGLING WITH HIGH HOUSING COSTS. THE U.S. HOME PRICE INDEX IS 47% HIGHER THAN IN EARLY OF 2020 , PUSHING THE MEDIAN SALES PRICE TO ABOUT FIVE TIMES AN AVERAGE HOUSEHOLD INCOME, INCREDIBLE. IT IS UP 26% ACROSS THE COUNTRY SINCE EARLY 2020. >>> CHRIS HERBERT , MANAGING DIRECTOR FOR THE JOINT CENTER FOR HOUSING STUDIES AT HARVARD. WE KNOW ABOUT INFLATION AND THERE IS A LOT OF DRIVERS. WHEN IT COMES TO HOUSING, WHAT IS FUELING THIS TREND? WHY ARE RENTAL AND HOUSING COSTS OUTPACING EVERYTHING ELSE INCLUDING SALARIES? >> IMPORTANT TO LOOK AT THE SHORT-TERM AND THE LONG-TERM AND THINKING ABOUT WHAT IS HAPPENING IN THE HOUSING MARKET. IN THE SHORT TERM, A PERFECT STORM DURING THE PANDEMIC. GOING INTO THE PANDEMIC, TIGHT HOUSING MARKETS WITH LOW VACANCY RATES FOR FOR SALE AND RENTAL HOUSING, DURING THE PANDEMIC, INCREDIBLE INCREASE IN DEMAND FOR HOUSING AS PEOPLE CAME TO REALIZE THEY WOULD NOT LIVE IN THEIR HOMES BUT WORK AND STUDY THERE, THEY HAD MORE MONEY, NOT SPENDING MONEY ON ANYTHING ELSE, AND STUDENT LOANS WERE DEFERRED. PLUS, INTEREST RATES BELOW 3%. TIGHT SUPPLY LED TO THIS INCREASE OF HOUSING PRICES THAT YOU ARE SHOWING ON THE SCREEN. THE SHORT RUN STORY, TIGHT SUPPLY AGAINST STRONG DEMAND. LONGER-TERM, IF WE GO BACK DECADES, HOUSING COSTS HAVE BEEN OUTPACING INCOMES SINCE THE 1960s. WHY IS THAT? PARTLY BECAUSE LAND IN WHICH ALL HOMESICK HAS BEEN GROWING FASTER THAN INCOMES. SECONDLY, THE HOMES HAVE GOTTEN LARGER, HIGHER QUALITY, AND THE EFFICIENCIES IN THE CONSTRUCTION OF HOMES WE HAVE SEEN IN OTHER INDUSTRIES LIKE AUTOMAKING, THERE HAVE NOT BEEN THOSE INCREASES IN EFFICIENCY OF CONSTRUCTION TO BRING DOWN COSTS. HIGH LAND COSTS AND HIGH COST OF CONSTRUCTION ARE OUTPACING SALARIES FOR A LONG TIME BUT THEY GOT WORSE DURING THE PANDEMIC. >> SINGLE-FAMILY CONSTRUCTION IS ACCELERATING ACROSS THE COUNTRY, SO THERE IS A GRADUAL INCREASE IN THE AVAILABILITY OF HOMES. WHAT KIND OF FUTURE IS THIS COST MAKING FOR ALL OF US, PARTICULARLY GROUPS HARDEST HIT BY HIGH HOUSING AND RENTAL EXPENSES? >> WE ARE SEEING SINGLE-FAMILY CONSTRUCTION GOING UP MODESTLY, SHOCKING WHEN YOU CONSIDER INTEREST RATES ARE NORTH OF 7%. THE REASON FOR THAT IS BECAUSE THE FACT THAT MOST HOMEOWNERS ARE SITTING ON MORTGAGES UNDER 4%, UNDER 3% IN MANY CASES, THEY ARE NOT INCLINED TO SELL TO FACE HIGHER MORTGAGE COSTS. WITH SO YOU EXISTING HOMES ON THE MARKET, HOMEBUILDERS ARE DOING WHAT THEY CAN DO. IT IS PRICING OUT FIRST-TIME HOMEMAKERS -- HOMEBUYERS. YOU NEED $120,000 IN INCOME, THAT MEANS ONLY ONE IN SEVEN RENTERS CAN AFFORD HOMES, FOR YOUNG FOLKS SEEKING THE DREAM OF HOMEOWNERSHIP, THE PATHWAY IS DIFFICULT. I DON'T WANT TO LOSE SIGHT OF THE RENTAL SIDE, THE PAIN IS FELT ACROSS THE BOARD WITH RENTERS AND MOSTLY FOR LOW INCOME RENTERS WHO ARE 83% OVER SPENDING MORE THAN 30% OF THEIR INCOME, 65% ARE SPENDING MORE THAN 50% OF THEIR INCOME AND THE AMOUNT LEFT OVER AT THE END OF THE MONTH IS VERY LITTLE FOR EVERYTHING ELSE. >> THIS IS A PROBLEM ANECDOTALLY MANY OF OUR VIEWERS, ALL OF US UNDERSTAND. YOU HAVE QUANTIFIED IT. PEOPLE ARE LOOKING AT YOU AS THE EXPERTS FROM HARVARD, IS THERE A RESOLUTION TO THIS PROBLEM? >> THERE IS. IT WILL TAKE SOME TIME BUT TWOFOLD, PART OF THE REASON WE ARE IN THE PUBLIC BECAUSE LAND IS EXPENSIVE AND THE COST OF PRODUCING HOUSING HAS GOTTEN HIGHER. THE SOLUTION IS TO REDUCE THE RESTRICTIONS ON HOW MUCH HOUSING WE CAN BUILD AND TYPE OF HOUSING WE HAVE TO BUILD HOUSING AT GREATER DENSITY TO MAKE GREATER USE OF THE LAND. THAT MAY MEAN TILTING MORE MULTI FAMILY HOUSING IN SOME PLACES AND ALSO MEANS BUILDING SMALLER AND MORE EFFICIENT SINGLE-FAMILY HOMES. WE HAVE TO LOOK AT REGULATIONS AND MAKE SURE THAT WE ARE MANDATING FOR HEALTH AND SAFETY WHICH IS NOT EXCESSIVE, BUILT SMALLER AND SIMPLER HOMES. THAT IS ON THE REGULATORY SIDE. WE CAN DO THAT AND FREE UP THE ABILITY OF THE PRIVATE SECTOR TO PRODUCE HOUSING NEEDED FOR PEOPLE WHO HAVE DECENT INCOMES. BUT WE CANNOT OVERLOOK THE FACT THAT WE NEED TO EXPAND THE HOUSING SAFETY NET FOR THOSE WHO HAVE INCOMES THAT ARE JUST BEYOND THE REACH OF THE PRIVATE SECTOR. WE ALSO NEED TO THINK ABOUT EXPANDING THE SUPPORT WE PROVIDE FINANCIALLY FOR FIRST- TIME HOMEBUYERS, PARTICULARLY FIRST-GENERATION HOMEBUYERS WHO DO NOT HAVE THE BANK OF MOTHER AND FATHER DETERGENT TO MAKE SURE THEY HAVE THE CASH THEY NEED TO COME TO THE CLOSING TABLE AND PURCHASE THEIR FIRST HOME. >> SUCH AN IMPORTANT TOPIC WHICH IMPACTS EVERYBODY, PEOPLE SHOULD LOOK AT YOUR REPORT, THE
