Ted Bauman of Banyan Hill Publishing recently wrote an article about the housing industry. Every year houses get more expensive. Since 2012 the average price of a new American home has increased by 50 percent and existing homes are up by a similar number. He said that nowadays potential homebuyers are pretty much locked out of the market. Many millennials, in particular, want to purchase a home but don’t have the resource to do so, Ted Bauman wrote.
The National Association of Realtors issues a First-Time Homebuyer Affordability Report each year. Their data shows that housing affordability in the United States dropped comparing the second quarter of 2018 to the first quarter. In the first quarter, the affordability rate was 103.9 and that number dropped to 92.5 in the second quarter. A value of 100 shows that a family earning the average household income has enough money to buy the average home. If the number drops below 100 then that is no longer the case.
Ted Bauman says that in 2006 this index was sitting at 68. After the housing crash, the index hit a high of 136.7 in 2012. This number has been declining ever since as incomes have not gone up much but the price of housing certainly has. While housing went up 50 percent in value the average person saw an income increase of only 3 percent. He says this has led to rentals being in demand with a vacancy rate sitting at a 25 year low.
Ted Bauman is an editor who writes about economic issues. His three publications are Plan B Club, The Bauman Letter, and Alpha Stock Alert. In addition to writing about housing and investing he also covers immigration issues and privacy rights. He spent the first 25 years of his professional career working in South Africa for nonprofits that build homes for low-income families. He went to the University of Capetown and has advanced degrees in both history and economics.
To learn more: https://twitter.com/TedBaumanGuru