In the years since COVID-19 put a halt on our everyday lives, housing prices in the U.S. have steadily increased and pushed our country into a housing crisis.
The rising costs of homes is not simple. Between construction costs, mortgage and insurance rates, supply and demand issues, and disruptions within the global supply chain, there are various things we can blame for why the housing market is as bad as it is.
A recent news story written by Michelle Chapman blames the current decline in pending home sales on high mortgages and housing prices and the rough weather that our year started with. It makes sense that the brutal winter weather would entice potential new home buyers to put a hold on their search, but then why haven’t things improved since the weather became warmer?
High mortgage and interest rates have definitely been a problem for those looking into buying their first home, but it’s actually a good thing, as it’s a sign of a strong economy. When a country’s economy is on the rise, credit becomes more sought after because consumers tend to make larger purchases, and corporations start to expand.
Inflation is also a sign of economic growth and has an impact on mortgage rates and housing or rental costs in general.
While it’s easy to blame inflation on the skyrocketing of home prices, others believe the problem can be traced back to a shortage of homes. While the demand for homes has not gone up — maybe even lowering slightly, in fact — the supply has halted as costs of construction continue to increase.
The number of new homes being built has been down over 300,000 per year for the last seventeen years, seemingly because population growth has slowed down. Yet, the demand for new homes has not changed, making it more likely that high construction costs and an increase in the sizes of new homes are to blame.
Housing has always been a hot-button issue for Iowa City politicians, which makes sense considering our city “has one of the worst affordable housing situations in the state,” according to an Iowa News Now article.
One reason for this is supply and demand issues. As more and more students and residents move to Iowa City, the demand for affordable housing — and housing, in general — increases. This makes landlords think they can get away with charging outrageous rental prices, like how the RISE apartment community charges students over $1,400 a month for a tiny, concrete studio apartment.
There are also strict land usage policies at play in our city that prohibit many contractors from building affordable apartments or townhouses.
While Iowa City has definitely felt the effects of the housing crisis, communities across our state are also struggling with rent gauging and housing affordability. A study from 2020 found that over half of the manufactured housing lots in Iowa were owned by out-of-state companies, and the number has only increased since then.
Insurance rates in Iowa are some of the highest in the country due to the almost year-round extreme weather events. Additionally, as construction materials become more expensive, Iowa homes are being made with low-quality materials, making damages more likely to occur.
The search for affordable housing, no matter where you are in the country, will be a struggle. Many prospective buyers gave up on their house hunt last year. Real estate prices are currently outpacing salary and wage increases, and the gap will only continue to widen.
Federal funding and grants could be this country’s saving grace when it comes to solving the housing crisis, but politicians need to acknowledge and face up to the reality of the problem first. The Biden-Harris administration was able to make $100 million available in funding and grants to try to make strides toward more affordable housing.
President Trump had plans for a billion-dollar program that would work to preserve affordable housing across the country, but he unsurprisingly halted the plan three weeks ago, with nothing being said about it since then.
The housing crisis has been staring Americans in the face ever since 2020, and it’s time for us to make politicians take action. There’s nothing we, as citizens, can do about the issue besides call and email our local politicians and urge them to take the issue seriously.
You may not think this issue affects you now, but if we continue to do nothing, then the problem will only get worse, and by the time you’re able to think about buying a home, it will be next to impossible. Housing should be treated as a human right, not a privilege that only those more fortunate get to enjoy.