Markets & Economy

Why ‘affordability’ isn’t the seed of the next market slowdown

The current policy puzzle is straightforward: why do we not have more new construction?
Published on Feb 29, 2016
  • Affordability is a self-correcting, circular issue in the housing market.
  • At the heart of affordability circularity: If buyers could not afford the prices being paid in any given market area, they would not pay them.
  • The odds are that construction now is slow to recover like everything else after the Great Recession, but will recover. Higher prices are less “affordable” but will encourage more supply.
  • Maybe there is some dysfunction -- credit, regulation, other impediment to development -- but not likely.

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by CareyBot

Brace yourselves: Soon, you’ll see assertions that U.S. housing is losing “affordability,” the leading cause of slowing sales asserted by those who have never sold a home, or provided a loan for one. There are two legitimate economic moments when homes become unaffordable, both temporary ...

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