Housing Affordability

Housing Affordability

Housing Affordability

In a meaningful way, the housing market in these United States is driven by policy that is pushed by the National Association of Realtors (NAR), and various state and local associations that operate as ground troops. The local associations take their marching orders from the state associations in the form of campaign endorsements, bill endorsements, these sorts of things. As the housing market in the great State of Wisconsin continues to outperform, there is much talk at these associations of one thing: Affordability.

A simpleton might assume that increasing prices are good for people. After all, if you own a house in Wisconsin, there’s a terrific chance that it has appreciated in value over the last five years. This should be a positive, something to be praised and hoped for, something that policy should be driven to assist. But rather that rejoice over increasing prices, the powers that be have taken to wishing for more affordability. Affordability, they say, that’s the key to everything. Without it we have nothing.

But what about the guy making $48k per year living in the $199k ranch in Elkhorn? Does he matter at all?  Where does housing affordability rank in his list of concerns? Is he worried that his house he paid $197k for ten years ago is now, finally, mercifully, worth $219k? Is he upset that his value has increased, finally, after that lost decade?  Does he wish for his local Realtor and the state board to do something about this recent increase in price? Is he sad that the new buyer can no longer find a home in his neighborhood under $197k?  Of course not. Joe Homeowner is finally happy, because he’s finally building some semblance of wealth.

Why knock him down now?

This is the strange thing about real estate. National types want to push for affordability. State types, the same. Local governments, affordability. County Master Plans, largely engineered to foster affordability. NEWSFLASH:  Affordability is for the birds. It’s a way to keep a market, a county, a municipality, stuck in the mud. I’ve heard often this year that there’s nothing to buy. Nothing cheap, nothing sort-of-cheap, nothing sort-of-expensive. The markets have gone mad, and this is a bad thing, or so those in charge say. We need to make Walworth County affordable again (MWCAA never caught on, in spite of the red hats).  But why? Why must we remain more concerned for future residents than for the financial well-being of our current residents? What’s so great about cheap housing markets?

Does a housing market need to be uniform at all times? Do we always need to have 10 homes for sale under $100k and 10 homes for sale over $1MM?  Do we need to avoid imbalance? We had a significant imbalance from 2009 through 2015- where were the housing affordability stalwarts then, when affordability reigned?  Were they concerned over too much inventory, just as they’re concerned over too-little inventory today? Why can’t we allow normal housing cycles to exist, without the need to stifle the upswing with added inventory? I fought off bad development over recent years by making market based arguments as to why we didn’t need them. The market today is more healthy, more robust, with inventory being absorbed at a wonderful clip. Why stymie the growth with a wet blanket soaked to the core with $199k vinyl ranch homes?

You’ll be reading much more about housing affordability in the coming weeks and months, perhaps  years. Pundits and housing analysts will bemoan rising prices. Go ahead and let them be sad, but if you’re a homeowner, enjoy the ride. You deserve it. At the end of the day, why do you suppose Realtor Associations want more inventory? To aid in prices? To assist the needy? Try again. It’s so Realtors have more houses to sell, and they’re in the business of helping Realtors. That’s fine, but don’t ever mistake association policy for something that seeks to benefit Joe Homeowner.

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