The three L's of real estate, location, location, location, are being dwarfed by the biggest issue of our time, affordability. And while this is especially meaningful for the poor, it is impacting people at all income and wealth levels. Even the wealthy when runaway luxe-flation fueled by extreme wealth gains for some has taken the prices of ultra-luxe properties to stratospheric levels.
I've heard complaints about affordability everywhere. From first-time buyers to students renting their first place, all the way up to someone buying their 'dream home' with an enormous budget only to discover they may have to spend more than anticipated. I have heard all sorts of piecemeal solutions offered by 'the experts' but rarely do I ever hear the full story.
Here are the primary issues:
1. Mortgage interest rates are higher than 2 years ago, but not high historically. Yet mortgage rates in other parts of the world are cheaper.
2. Too much, too complex regulation.
3. Slow inefficient building reviews, permitting, inspections, etc.
4. Zoning that has not been revised and evolved in years/decades.
5. NIMBYS - not in my backyard - who prevent any and all new construction, or slow the process to a crawl.
6. YIMBYS - yes in my backyard - who want to build massive towers anywhere, with complete disregard for infrastructure needs, traffic, area character, etc. They scare the NIMBYS.
7. Politicians using housing as a wedge issue.
8. Poor financial education to help people early on planning or saving to buy a home.
9. Corporate rental entities buying up limited supplies of homes to rent back to consumers distorting markets.
10. Any government policies that raise the cost of building materials.
11. Excessive government fees on things related to construction.
12. Shortages of skilled labor.
13. Insufficient building methods, lack of technology and automation to help speed up construction and bring down costs.
14. Insufficient investments in infrastructure for future development.
15. Counter-productive government rental policies that keep thousands of apartments from being rented as they become economically unviable.
16. Government incentives to build more, with the best incentives to build that which is in shortest supply.
17. Good design/architecture to help design more affordable home options that are not hideous.
18. Long term planning and legislating, not exclusively focused on quarterly earnings or 4-year election cycles.
So there you have it: AFFORDABILITY, AFFORDABILITY, AFFORDABILITY! Unless we address ALL of these issues, those one or two soundbite-worthy tidbits will have limited to no effect.
