I spent the last few days with housing experts and found there is a consensus that the biggest current challenge to homeownership is housing inventory. While most of the attention regarding homeownership opportunity is typically focused on identifying demand solutions, housing supply is the primary barrier today. The housing crisis of 2008 crippled the homebuilding industry as much or more than the lending industry. Because of this, new home construction all but ceased for the five years that followed. Meanwhile, household formations increased by an average of one million per year during that same time frame. Additionally, as the housing market struggled through recovery, a new cottage industry of real estate investors emerged and started purchasing single-family homes by the thousands. As the market stabilized and homebuyers came back into play, inventory shortages quickly became the primary problem. Homebuilders also point to the surging fees and costs associated with building new homes that make the economics of building affordable homes prohibitive. This is a problem without a silver-bullet solution which will take massive collaboration between national and local governments, along with the building and real estate industry, to solve. The McKinsey Global Institute produced a great study on the problem in California that includes a five-step process to address the issue locally. It is a great read if you have the time.
The usual solutions will not solve the current housing affordability crisis. Any solution that does not begin and end with a sustainable plan to radically increase housing supply is just noise. The barriers to increasing housing supply are complex and require the crucial cooperation of both public and private sectors, and more education.
It has been long understood that a nation of stakeholders makes for a strong union, and for that reason, closing the minority homeownership gap has been a goal and a topic of discussion for decades.
Between 2008 and 2012, more than six million people lost their homes to foreclosure, property values lost almost 40%, and non-distressed home sales fell to all-time lows. It was, without question, the worst real estate market since the great depression. Not surprisingly, the historic dip in the market was followed by a decade-long bull market, the likes of which we have never seen before. Residential real estate is a cyclical market. The...