The housing market in North America has been through a lot of changes over the last 10 years. To understand what’s been going on, it’s important to talk about the housing crisis of 2008. What happened during that time affects today’s market.
A Renter’s Nation
At the moment, there are more renters in the nation than homeowners. That wasn’t the case for many years, but it is now. The truth is there are a lot of reasons this is happening in America.
Some could point to the student debt crisis. It’s impossible to purchase a home if you’re drowning in debt. Others could point to the reality of the minimum wage. Rents have never been so high, yet most Americans are barely making enough to take care of that expense let alone set something aside to purchase a home.
Many factors could be highlighted, and one of the factors has to be the housing crisis. In essence, it took away homes from many Americans, and most of them had to go back to being renters.
Some of these folks are having a hard time finding a way back to homeownership for various reasons. Some of these folks have ruined their credit, other times it has to do with the stress of losing a home.
People worked so hard to finance a home and lost it all in the blink of an eye. It’s a horrible experience that could hurt the spirit.
Diving Into the Challenges in the Housing Market
Everything that happened during that time showed Americans that lending had to be regulated a little more effectively. The thing that hurt homeowners before the housing crisis was predatory lending, which was addressed by increasing lending standards.
This made it harder for potential homeowners to be in a position to purchase a home. There’s one more thing that needs to be addressed: affordability.
Sure, mortgage lending gives families enough money to purchase a home, but the amount folks have to borrow is even bigger. Median home prices have skyrocketed since the housing crisis.
Some are scared that these prices represent a new bubble that’s bound to burst at some point. These prices go beyond what most Americans can afford.
The deal Americans made with loans seems to be a double-edged sword. Being able to purchase a home you can’t afford has allowed the real estate market to increase prices significantly. People don’t feel this financial burden because they can just borrow the money.
Problem is, you end up paying on the home for 30 years to pay off the debt. In addition to that, homeowners have to pay for any updates and repairs even though they don’t own the home outright. It seems that some retooling is needed here. The deal between lenders, real estate owners, and homebuyers needs to change to be more equitable for all.
The problem with the housing market can also be broken down in other ways that haven’t been mentioned. Other factors could make it more challenging for some Americans to even consider becoming homeowners like income inequality, race, and even status as a single parent or not.
A Ray of Hope
The American housing market is indeed facing some real challenges.
Some of these issues are being talked about like the income inequality factor or the race factor. Other positive things are happening as well as the rise of gig workers and remote workers. Some of this happened because of the pandemic, but some of these trends were happening before.
The reason this is good is that many of these freelance and remote workers are leaving large, overpopulated areas and are moving to smaller towns across the US. This is driving house prices up in some of the smaller cities across the nation.
After all is said and done, this could reduce house prices in some of those highly populated areas that could lead to more opportunities for folks who want to stay there. This may not be happening now. Homes are still pretty expensive, but it’s a possibility worth keeping an eye on.
It should be pointed out that homeownership is still something most people want. This is the reason some Americans are turning to the rent-to-own homeownership route.
Of course, this has always existed, but the housing crisis forced many Americans to consider this route so much so that it’s considered a rising trend. It’s been the answer for many people who haven’t qualified for a regular mortgage.
The rent-to-own deals give Americans an opportunity to own a house, but there are some drawbacks. Yes, you could live in a good home, but you may still be expected to deal with some repairs. If you don’t keep up with things in the contract, you could be evicted. That’s something traditional homeowners don’t have to worry about.
There’s no telling how long this particular trend is going to continue. It’s a solution for many folks, but it’s not a great solution. Maybe since it is trending upward, better deals will pop up to attract this new group of potential homebuyers.
What Homebuyers Want
The housing crisis and some of the changes in American society have also changed what Americans expect from their homes. For example, homebuyers nowadays are looking to scale back. They want smaller homes. Some people are even opting for tiny houses. This is all done to reduce the amount of cash they have to spend on their homes.
On top of that, homebuyers want a home with a built-in home office. More folks are working from home, so a home office does make sense.
Since homebuyers want a more simplistic look, builders can create homes with a smaller price tag since it doesn’t cost them as much to make. This could end up producing more affordable homes in the future.
Now, you know a bit more about the housing market over the last decade. The pandemic is bound to have lasting effects that no one’s predicted yet, so it’s wise to keep an eye on how additional changes develop after this moment in time.