The housing market — particularly new construction — sadly reflects our country’s economic reality: The rich get richer, and things just get tougher for everyone else.
During the Great Recession a few years back, amid the flood of home foreclosures, talk centered on the need to “downsize” homes from the McMansion model, and to “simplify” life in general, and “green building” and more sustainable ideas about how we might live. But forget all that. Downsizing is for the little people. The economic rebound has led to even bigger houses than before, and even fewer choices for those in the middle and lower income brackets.
The average size of a new home rose to about 2,720 square feet in 2015, from 2,660 square feet in 2014, the National Association of Home Builders reported. Today’s new homes are more than 60 percent larger than those newly built in 1973, according to Pew Research Center. Nearly half of the new homes built last year had four or more bedrooms and a quarter of homes had garages that would hold three or more vehicles.
In 2015, the average price of a new-home rose to $351,000 — up $100,000 from 2009, according to the home builders association.
What all this means, according to The Wall Street Journal, is that more and more builders are constructing luxury homes, and fewer are building what used to be known as “starter homes.” Apparently there just isn’t enough profit to be made in building smaller houses. The Wall Street Journal sums up the problem this way:
“Home sizes have grown lately because new construction has been tilted toward the high end. Builders do aim to draw young buyers in at lower price points, so that there is a market for some of their more expensive products over the long term. But they haven’t made more starter homes in recent years mainly because of land prices, construction costs and lack of available mortgages for less-affluent buyers.”
In some housing markets, such as Seattle, where people make cash offers well over a home’s asking price, your middle income and “less-affluent” buyers don’t stand a chance. Even “modest” homes are plucked up by the rich, to be torn down, so they can build new, and big.
Economists note that incomes have long lost pace with the cost of homes. And that’s largely in part because the homes keep getting bigger, and more expensive. The homebuilders association says Americans aged 25-34 need to enter the market to spur the building of more modest-sized homes. But except for those who are rich, how exactly are they supposed to enter the market?
We can’t afford to allow the wealthy to drive and completely control the housing industry. Homeownership used to be one of great the equalizers in our society. Now more and more people can’t afford to buy, or even rent. How do we start to turn this around?
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