The current cost of living in these places is so high that they are said to be “impossibly unaffordable.”
The figures are in, and the most popular opinions have been tweeted: inflation is decreasing, the stock market is expanding at a rapid pace, salaries continue to rise, and there is an abundance of employment opportunities. I pray that God would bless this economy.
On the other hand, the majority of Americans are not quite prepared to crack open the champagne just yet. Despite the fact that studies indicate that individuals typically have a positive outlook on their own personal finances, we are still stuck in a “vibecession” of sorts.
People don’t get the impression that the economy is doing as well as it truly is because of one major factor that cannot be avoided, despite all the positive news that has been reported.
Rent, as well as housing costs in general, continue to be quite expensive.
Look at this: When measured on an annualized basis, the Consumer Price Index for the previous month came in at 3.3%. In other words, the prices of the products and services that you purchase on a daily basis are around 3.3% more than they were a year ago on average. As a result of CEOs realizing that their consumers had had enough of their pricing power antics, several large retailers are even lowering the prices of some things.
The situation is even more favorable when one considers the “supercore” Consumer Price Index (CPI), which is an unofficial measurement that does not include the cost of food, gasoline, or the cost of renting or owning a house. In comparison to the previous year, the price of supercore increased by just 1.9%, which puts it squarely in the sweet spot that practically every central bank in the world strives to achieve.
Regrettably, the realities of life do not let us to just shut our eyes and make the expenses of paying for things like food, transportation, and rent vanish.
When compared to the previous year, the expenditures associated with housing, which include rent and an anticipated cost of owning, increased by 5.4%. This is a little improvement from April, and it is a significant decrease from their highest point of 8.2% in March of the previous year. (Prior to the pandemic, the annual rate of inflation for housing was normally at about 3.5%.)
The vehicle in question is an 18-wheeler that is braking down a mountain. Jay Parsons, an economist and the director of investment strategy at Madera Residential, an apartment developer located in Texas, said that while they are aware of the direction in which it is heading, it is progressing at a moderate pace.
Changes in the Consumer Price Index (CPI) on a monthly basis are just one piece of the complicated housing jigsaw. The Consumer Price Index does not take into account the cost of purchasing a house, which is a different and distinct nightmare at the present.
In a manner that is characteristic of his modest manner, Federal Reserve Chair Jerome Powell remarked on Wednesday that the housing market is a challenging one. “In the end, the most beneficial thing that we can do for the housing market is to stabilize inflation so that we can lower interest rates, which will allow the housing market to continue to return to its normal state.”
The housing supply is limited, mortgage rates have been staying around 7% for months, and house prices have continued to soar to all-time highs. This is not exactly breaking news, but it is important to note that these trends are occurring.
As a result of the accumulation of all of these variables, the market has become very sticky, and no one can afford to move, and even fewer people can afford to purchase.
And if you are one of the fortunate individuals who is able to locate a property that is within your financial means, you should fasten your seatbelts since the expenses do not end when the door is closed.
The results of a recent survey conducted by Bankrate indicate that homeowners in the United States are now spending an average of $18,100 annually on home-related expenditures that go beyond the cost of the house itself. These costs include property taxes, insurance, maintenance, energy, and a variety of other charges. When compared to the average yearly cost of maintaining a property, which was $14,400 four years ago, this is a 26% increase.
Early indications suggest that the housing market is beginning to move away from its current state of stagnation.
Zillow’s most recent market study discovered that sellers are returning to the market, but they discovered that buyers had lost some of their excitement because of the market.
The number of homes sold in May was 6% fewer than the same month the previous year. According to the research, this has contributed to a partial replenishment of the housing inventory, as the number of properties now available for purchase has increased by 22% in comparison to the almost record-low level that existed in the previous year. Although inventory is still 34% below the standards that existed before to the epidemic, this gap is the least it has been in more than three years.
Zillow’s senior economist, Orphe Divounguy, said that homeowners who may have delayed selling their houses are now done waiting for the opportunity to do so. At the same time, the combination of inflation and high financing prices has prevented first-time purchasers from purchasing homes, which has resulted in a decrease in the amount of competition for housing.
According to Divounguy, “If these trends continue, we are likely to see price growth either level off or begin to decrease over the course of the next year.”
Obviously, as Powell said in his address on Wednesday, it might take “years” for the inflation rate in the housing market to return to normal
The senior vice president and top economist at Fannie Mae, Douglas Duncan, said that there is no “silver bullet” solution to the problem. It is a part of it that individuals have access to property that is close to where they wish to live or where they are required to reside because of their work… Even while there are a great number of little tests being conducted in a variety of locations, no one has yet found a solution that is universally applicable. That silver bullet is not something that we have at our disposal.”
