By Jeanene Dunn
You often see headlines “Homeownership Remains Out of reach for Many” and “Cities Where Homeownership Has Become Unaffordable.” The fact is that “shelter” costs continue to rise, and for the past several quarters shelter inflation has been more than 50 percent of overall inflation growth.
So, really, every single story about inflation should begin with the headline “Inflation is a Housing Problem,” according to Robert Dietz, who is the chief economist for the National Association of Home Builders.
“The U.S. has had a housing deficit for about a decade,” said Dietz at a recent KCHBA event in Kansas City. “The solution is straightforward. Build more attainable housing.” But he notes that housing is not just a “housing” problem, meaning there are other factors affecting the housing market that the industry itself cannot control or fix on its own, such as inflation, interest rates and a growing scarcity of land.
Laws are another source of ever-increasing housing costs. While local policymakers can’t change inflation or the cost of materials, they do have a direct impact on:
- Local regulations and policies
- Difficulty in obtaining zoning/permit approval
- Impact/hook-up/inspection or other fees
The next time you hear a city councilperson or other local representative say affordable housing is a top priority, Google what ordinances they have voted for related to housing and home building. The results may surprise you.
So will families in Kansas City be able to purchase a home in 2024?
Many economists predict interest rates will fall this year and that there is reason to believe in 2025 rates will drop below 6 percent, which will lower the cost of homes. But with those rate cuts comes an increase in demand, potentially leading to bidding wars and people purchasing homes sight unseen.
