"Ask most people what's wrong with housing affordability, and the answer comes quickly: rates are too high. It's an easy diagnosis, clean and intuitive, and it fits neatly into headlines and political talking points. But it's also incomplete, and increasingly, misleading. To understand why, it helps to start with something personal. The first home I bought was in 1989. It cost $259,000. My mortgage rate was 10 percent."
"For years, housing policy debates have danced around the core issue: we simply don't have enough homes. Zoning restrictions, municipal permitting costs, and regulatory friction have pushed builders into a corner where the only economically viable projects are high-end homes. In many markets, particularly coastal states like California, it is nearly impossible to make money building entry-level or workforce housing."
Housing affordability remains a major challenge across the mortgage industry and the broader housing market. High mortgage rates are an easy and visible explanation, but rising home scarcity and high home prices are the primary drivers of worsening affordability. Historical comparison shows that even with much higher nominal mortgage rates decades ago, price-to-income ratios and transactional systems (supply, taxes, fees, and friction) were more forgiving. Zoning restrictions, municipal permitting costs, and regulatory friction have made entry-level and workforce housing unprofitable in many markets, particularly coastal states like California. Builders therefore chase high-end, seven-figure projects, skewing inventory expensive and widening the gap between incomes and home costs.
Read at www.housingwire.com
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