Can Builders Save The Housing Crisis From 10% Mortgages?

  • December 20, 2023
  • 2 min read

In California, the push to alleviate the housing gap and reduce homelessness has centered on increasing home construction. However, despite efforts to jump-start construction, obstacles persist. High interest rates and a shortage of qualified construction workers are hindering progress. Consequently, the imbalance between renters and homeowners continues to widen.

Rising Concerns about Renting and Health Impacts
Recent studies highlight the detrimental effects of renting on health, likening its impact to that of smoking or obesity. The stress, economic uncertainty, and unstable living conditions associated with renting can significantly affect individuals’ well-being. Additionally, rental properties tend to be situated in less healthy environments compared to homeowner residences, further exacerbating health concerns.

Struggles with Expanding Rental Properties
To counteract the housing issues, several states, notably California, are pushing for more rental property developments. However, bureaucratic challenges such as impact fees, government intervention, and community opposition are impeding progress. This difficulty in launching rental projects intensifies the housing crisis, leading to a “game of chicken” with the economy.

Anticipated Economic Shifts and Housing Market Projections
Forecasts suggest an imminent increase in mortgage rates, with expectations of reaching 10% by 2025. This significant rise poses challenges for prospective homeowners, making property purchases less affordable. Concurrently, existing property owners may raise rents due to higher costs, increased market demand, and limited opportunities for renters to transition to homeownership.

Forewarning for the Construction Industry
As interest rates climb, the construction industry faces mounting difficulties in kickstarting projects. More individuals entering the rental market amplify these challenges. Permitting issues, zoning constraints, and associated fees compound the struggle of initiating construction ventures. Professionals in the field are urged to share their experiences and concerns regarding these impediments.

Seeking Insight and Real-World Perspectives
The disparity between renters and homeowners extends beyond finances, influencing health outcomes and job prospects. Homeownership may offer greater stability, impacting one’s employment search positively. Insights from various geographic areas and firsthand experiences can shed light on the wider implications of these disparities and the challenges faced in different communities. Share your observations and opinions to enrich this conversation.

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