Half of US homeowners and renters reported regularly struggling to make their housing payments, according to a recent Redfin survey. The cost of living over the past couple years is hurting Americans, and housing is a big factor in this equation. On today’s show, we’re going to discuss what’s behind America’s housing crisis.
You’re going to learn about building trends, interest rates, and possible solutions to America’s affordable housing crisis. We’re also going to discuss why build-to-rent housing covers an important need in the market, and what investors can do to help keep housing costs down. Click play to hear more on this episode of Investing in Real Estate!
More About This Show
The cost of getting a mortgage has skyrocketed, with rates being higher over the past year. And in some markets, rental rates are even worse.
Estimates vary depending on the source, but millions of housing units are needed across the United States. Low inventory combined with high interest rates have created an absolute disaster. This problem has been years, if not decades, in the making.
We know that homeowners who purchased or refinanced their homes during the pandemic era are locked into historical low interest rates, with little motivation to sell. It’s predicted that more than 90% of American homeowners are locked into rates below 6%.
And for those hoping to buy a home, interest rates are putting a massive damper on purchasing power.
Builders have never fully recovered since getting burned during the Great Recession. Plus, it costs more to build today. From increased pricing of lumber, labor, and interest rates, it’s risky for builders to push out a substantial amount of inventory.
The shortage of affordable housing has created an all-time surge in homelessness rates – particularly in cities where rents have soared, like Sacramento, Fresno, Phoenix, and Austin. Between 2017 and 2022, Sacramento saw a 47 percent change in median rent, while homelessness increased by 144%!
Biden recently proposed tax credits to improve housing affordability… But critics say that these incentives could actually worsen the problem, by failing to address the root cause – which of course, is lack of inventory.
But the government does not hold the answers to the affordable housing crisis. In fact, they’ve proven time and time again to be ineffective at providing housing to Americans. Certain HUD programs, like Section 8, have proved to help low-income renters… but this only serves a small percentage of the population.
We know that the problems with higher interest rates are a short-term hurdle, but the lack of inventory has been brewing for years now. This can’t be fixed overnight. There’s not a clear-cut solution to solving the affordable housing crisis.
Smart real estate investors find a way to profit despite what’s going on in the market – and we know that the affordable housing crisis is an opportunity to contribute housing to those who need a place to rent until buying becomes more likely. Because there are more people looking to rent, there’s a potential for long-term, stable income.
But if you want to make a smart investment, that starts with buying right. In the midst of an affordable housing crisis—with high interest rates and low supply, it can be hard to find a property that checks all of your boxes.
Our new construction properties at Morris Invest can help you reach your goals. Because we buy and build in bulk, we’re able to pass down savings to our investors. And our properties are located in the best growth markets in the US. If you’re interested in learning more, head over to morrisinvest.com to schedule a free 30-minute call with my team.
A housing policy article by Pew Charitable Trusts states, “The academic research has consistently found that allowing more homes to be built keeps housing costs down. In tandem with the work showing that housing costs are the primary driver of homelessness, the findings suggest that allowing more housing to be built, whether subsidized or not, can reduce homelessness.”
That being said, investors should also consider accepting Section 8 or other housing vouchers. This allows you to offer a great place to live to someone who needs it – but it also guarantees rent payments from the government. Renting affordable properties is the only way some families can get by right now, and we need more safe, affordable housing from real, fair landlords.
Episode Resources
Book a Call with Our Team
morrisinvest.com/bootcamp ← Download your FREE 90-Day Bootcamp!
Subscribe to Investing in Real Estate on Apple Podcasts
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel
Like Morris Invest on Facebook
DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion. We recommend them because they are helpful and useful, not because of the small commissions we make if you decide to use their services. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.
