By Brad Hunter | Forbes
Homes have been getting less and less affordable, but there are some innovative approaches coming from the marketplace that will help to alleviate this problem.
New home construction is not keeping up with demand overall, and the homes that are being built are not priced in such a way that first-time home buyers can afford them. Skyrocketing land prices and rising costs of materials, combined with shortages of skilled construction labor are limiting homebuilders’ ability to serve the entry-level buyer. Some builders (notably D.R. Horton and LGI) have directed serious attention toward the under-$250,000 new home market, but more needs to be done.
Home prices have been rising 41% faster than the general inflation rate over the past 25 years. When mortgage rates, currently at generational lows, start to once again move up to normal levels, monthly payments will increase and affordability problems will get worse across almost all income groups. It is important for business to figure out new ways to adapt.