Like everything in the economy of the United States, the cost of goods is determined by the supply and demand process. But does this same concept apply to affordable housing in the United States? In short, when the demand is high, the price will get higher. On the other hand, when the supply is higher, the price will become lower.
The Demand Side
Let’s discuss the demand side of affordable housing. If the availability of affordable housing is limited in the market, then the demand will go higher. As a result, the price will go higher. With affordable housing, the cost is limited. This is because the cost of affordable housing can go as high as the other residential solutions, added Maxwell Drever. If the rent is limited and the supply of affordable housing is halted, there’s no way affordable housing demand will increase. Over the past couple of years, the median wage is not expanding. At the same time, the cost of living is rising, and low-income families are experiencing cost-burdened issues. Even though new housing has been added to the market, the price is not affordable for low and middle-income families. This is why the demand for affordable housing is enormous amongst low-income housing.
Therefore, to summarize, low-income families require low-income housing. As the quantity of low-income housing is limited, the demand and the price are increasing rapidly. As rents go higher, this makes the housing unaffordable for more Americans and creates an affordable home crisis.
The Supply Side
Now let’s discuss the supply side. The capability to increase inventory and create new affordable homes will take a significant amount of time. Hence, it’s safe to assume that the supply of affordable housing is constant. Additionally, the new constructions are not focused on affordable housing, which is creating a massive supply problem. As the real estate properties change hands, which happened in extreme volume for the last couple of years, the new and potential real estate investors prefer investing in the renovation and remodeling process. This is why the prices are going higher, and affordable housing affordability is becoming lower. The lack of affordable housing, even when the demand is high, is creating massive problems regarding homelessness in the United States. Even the existing affordable housing is witnessing a surcharge in the rent.
The increasing demand for affordable housing is causing the rent to go higher. Low and middle-income families are paying more than 50% of their overall salary in rent. This is why they are facing problems affording the basic needs.
Maxwell Drever Discuss Why It’s Important to Develop More Affordable Housing
Real estate investors should consider affordable housing as a profitable option while also making the properties affordable for low and middle-income families. However, real estate investors need to balance this out. If managers think that they would only use affordable housing to profit as much money as possible, they are taking the wrong steps. While making profits in their business, the real estate investors should also think about the country’s renters.
Housing is undoubtedly the most important basic requirement of any person, apart from food and clothes. If the Government takes the appropriate steps, they can easily shorten the affordable housing crisis.