The Federal Reserve’s easy-money policies have driven house prices to unaffordable levels for most people. From David Stockman at lewrockwell.com:
Recently, the Wall Street Journal pulled no punches with respect to the soaring cost of homeownership:
Homeownership has become a pipe dream for more Americans, even those who could afford to buy just a few years ago……it is now less affordable than any time in recent history to buy a home, and the math isn’t changing any time soon…… That means buyers get a lot less home for their dollar. Before the Fed started raising rates, a person with a monthly housing budget of $2,000 could have bought a home valued at more than $400,000. Today, that same buyer would need to find a home valued at $295,000 or less.
And, yes, you can blame the Fed for this baleful state of affairs, but not owing to the normal complaint that mortgage rates are too high. Nor could the problem be remedied by government-imposed mortgage interest rate caps.
Actually, true mortgage rates are still sub-normal. What is way too high are home prices, and that condition is absolutely attributable to decades of interest rate repression, which is now taking a second bite of the apple owing to a severe, cheap-mortgage “lock-in” effect that is keeping millions of homes off the market.
Also the people that buy homes to rent out as ABnB’s for cash flow. That leaves one less house for a family to buy in which they could raise a family.