Why Houses Are So Expensive In The U.S.

shopping for a new single-family home in the u.s is arguably harder than ever before there's a bidding war for literally every home on the market every fixer-upper every every house that needs even a lot of work my neighbors actually because we're on vacation were calling me and texting me saying what is going on at your house there's people in a line down the block we saw two people having a fight with city dwellers emigrating to the suburbs and families looking for home offices and bigger yards prices for the american dream home have skyrocketed home prices surged in march 2021 up 13 from the year prior according to the s p case-shiller index everybody expected uh housing to really sort of dry up with the rest of the economy and in fact the opposite has happened with homeowners unwilling to sell a record low supply of homes for sale has forced buyers into intense bidding wars at the end of april 2021 there were only 1.16 million houses for sale in the u.s down 20.5 percent from the year prior higher costs for land labor and building materials have also impacted home builders so currently in the united states we have a huge shortage of housing we're not producing nearly as much housing as we should be we know that homeownership is the primary way of getting into the middle class but unfortunately there are many impediments to that that are divided by class and particularly race with a 30-year fixed mortgage rate hovering near a 50-year low and a strong demand pushing prices to all-time highs why is the housing supply so meager is the us running out of houses [Music] the u.s real estate market is red-hot since the start of the pandemic five percent of buyers who purchased a home did so without even physically seeing the home in person in many markets competitive bidding wars are the norm there's a bidding war for literally every home on the market every fixer-upper every every house that needs even a lot of work it's still just a crazy bidding war our house had 44 offers on it with his new york city office shut due to the pandemic and looking for more space for his family in the summer of 2020 justin goldberg and his wife jessica put their three-bedroom bloomfield new jersey home on the market the house listed for 399 000 my neighbors actually because we're on vacation we're calling me and texting me saying what is going on at your house there's people in a line down the block you saw two people having a fight with multiple six-figure offers over the asking price the house sold for 542 000 over 140 000 more than what the couple was asking for but the family then found themselves struggling to find a new home it was a definitely a risk for us to take because we knew that the pandemic wouldn't last forever his job said you'll be working from home for the foreseeable future and gave up their office space in the city with little inventory on the market the couple signed a one-year lease on a rental and on the advice from their realtor they then modified their house search from looking for a move-in ready home to a fixer-upper i'm telling you immediately you walk into the house that you want to buy and you get the feeling and i got the feeling and we walked through the house and it was not in good condition the bones were there you know there was nothing structurally wrong with the house everything was technically in good shape everything that needed to be changed was pretty cosmetic but every single room in the house needed changes the family of four found a four-bedroom fixer-upper in randolph new jersey with more space and a bigger yard we wanted a bedroom for each of our children and an extra office or a guest room would have been fantastic although the home was already under attorney review the couple put in a higher bid and ended up buying the house for 555 000 according to experts a few key steps home buyers can take to navigate the ultra competitive market include getting pre-approved for a mortgage finding a good real estate agent and figuring out exactly how much you're willing to spend an additional option first-time home buyers have is to rent the home back to the seller while they look for their new home my best advice at this time is if you don't want to overspend go into a house knowing that you're going to do a little work and you'll probably get it for a better price and honestly you can turn it into your dream home the u.s has a housing shortage with potential sellers unwilling to show their homes during the pandemic in april 2021 there were 1.16 million u.s homes for sale down 20.5 percent from a year earlier that lack of inventory has helped push the median price of existing homes higher up a little over 19 percent from the previous year to a historic 341 600 one key factor in that price jump is with fewer less expensive homes on the market sales at the higher end accounted for much of the activity during that same period homes were selling in record time too typically just 17 days on the market while several large publicly traded companies like nvr lennar bees are homes and hydnanian enterprises construct single-family homes townhouses and condos the vast majority of new construction in the u.s is done by small businesses home building is one of the last real vestiges of small business in america uh the overwhelming a number of housing and i want to say it's close to 75 or 80 is built by small businesses mostly family-owned uh all over the country those builders have faced serious hurdles in recent years including pandemic related supply chain disruptions that have caused a spike in the price of building materials like drywall steel and wood the supply chain is in complete disarray right now from kovit the poster child for that is lumber as of may 2021 lumber prices are up more than 300 percent from a year ago according to the national association of home builders rising lumber prices have added almost 36 000 to the price of a new single-family home an aging workforce and challenging immigration policies have also led to a shortage of construction workers we simply don't have enough people therefore labor prices are going through the roof labor was a problem for us during the last housing boom and during the recovery and it's even more of a problem now because in many places it is easier for potential workers not to come back to work and stay on the sidelines an even bigger problem might be the land that houses are built on as of april 2021 the price per single lot is up 11 compared to last year real estate data firm zonda said new lot supply is down 24 from a year ago and the challenge moving forward is infill how do we invest in cities into older suburbs how do we reinvigorate with greater density things like accessory dwelling units for your mother-in-law in the backyard how do we handle people who are challenged with affordable housing it's all going to mean that we have new development patterns we need new forms of housing so yes we're not building enough housing and we need to double or triple that rate of housing just to meet natural growth in our economy and i think we can do that but we have to do that by thinking of new forms of housing and really changing our zoning [Music] home ownership is a catalyst for building wealth with the added benefit of providing safer neighborhoods for families and better schools for kids but not everyone can afford to own a home that's why the homeownership solution is a solution even now for many households the problem is getting into home ownership in the first quarter of 2021 the homeownership rate in the u.s was 65.6 according to the u.s census the homeownership rate for white americans in the u.s is almost 74 compared to 49 for hispanic americans and 45 percent for black americans a major hurdle for many is the down payment typically home buyers put 20 percent down when taking out a conventional mortgage we know that typically also requires having a certain amount of income and for a lot of people that is much easier said than done for example for people of color it is much harder to be able to put down that type of down payment because they may not have the familiar support as people who come from more affluent neighborhoods these gaps are exceedingly troubling because the implications of them are very pervasive black household wealth is one-tenth but it is for white households and a big large portion of that gap is due to the lack of home ownership even though mortgage rates are had historic lows the uh there's been a ratcheting up of the qualifications that are required to borrow to become a homeowner and that has impacted minority households more than majority households buyers paying less than a 20 down payment are often subject to primary mortgage insurance that can range from an additional thirty to seventy dollars per month for every hundred thousand dollars borrowed according to zillow student debt is another barrier many first-time home buyers face according to the national association of realtors the average home buyer in 2020 carried thirty thousand dollars in student debt when i talk to young people a lot of times they are trying to pay their rent versus their grocery or they're trying to pay their student loans single-family zoning pervasive across much of the us limits the number of units that can be built on a plot of land making it difficult for families to afford certain communities single family zoning has really been a barrier from lower to moderate income people to be able to live in particular neighborhoods because single-family zoning bans any type of home being built or any type of multi-family home or any type of detached home from being built which is a huge barrier to people who are just trying to start off but that may be starting to change in 2019 oregon became the first state to pass legislation banning single-family zoning in most of the state around the same time minneapolis became the first big american city to end the practice so one of the major impediments to our shortage of housing in addition to the land economics and the supply chain is that we have a lot of communities in this country that don't want to have affordable housing they don't want to have anything other than large suburban estates if you will and i think we need greater exercise of federal policy over these local communities that are utilizing exclusionary zoning to really grossly impact the provision of affordable housing the federal government is taking steps to increase affordable housing too in april 2021 the biden administration announced a 5 billion plan providing financial incentives to push local governments to allow multi-family dwellings in neighborhoods that are currently restricted to single-family homes this is a market for housing for home ownership for those who wish to get into home ownership and those who are homeowners people are expanding their homes they're renovating their homes they're building out new backyard so this is a home owner's economy there's never been a stronger economy for homeowners than now and as a contribution to the overall economy home ownership is more important than ever

Channel: CNBC

Views: 1,881,669

Keywords: CNBC, business, news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, financial news, Stock market news, stocks, housing, expensive houses, why are houses so expensive, suburban houses, buying a house, mortgage, covid-19, coronavirus, city housing

Id: AcVaTIW-DGQ

Length: 11min 42sec (702 seconds)

Published: Tue May 25 2021

Reddit Comments

[u/megatog615]

This video does not mention that actual reason and it's because of foreign investments purchasing homes and leaving them empty so they can sell them at higher cost or rent them out.

[u/[deleted]]

Didn’t watch the entire video, but what I’ve seen it’s got some flawed premises. It states the US has a “housing shortage”, which is an outright lie. The US has a housing surplus with tons of homes not occupied. More unoccupied housing than homeless people. The problem is that those with a ton of money are buying up properties and sitting on them in order to drive prices up. It’s price manipulation. Unless you got tons of money to put down, you’re going to get screwed in this rigged system.