I have put this off, as it is a complex subject, but it's time for me to address this thing. Please read to the end if you dare. With housing prices increasing dramatically in St Louis and across the country, affordability has become an even bigger deal than pre-pandemic, when it was an issue then. How bad is it, and what can be done.

Let's start with what it is. Most sources measure the cost of housing expenses, whether mortgage or rent, as a percentage of your gross income, and 30% is the figure quoted the most. Mortgage rates and home prices drive the cost factor for owners, vs straight rent, and many sources include taxes, utilities and other housing expenses. Location can be critical to these figures, and understanding they are median figures or averages. The National Association of Realtors uses an index with 100 being the median household income qualifying for the median price home with mortgage of 20% down. A figure higher means they have more income, and a figure below is less income to buy that median priced home. As you can see in the link below, the Midwest at 128 is considerably more "affordable" than the Western US at 70 (and listed as double the median home price from the Midwest), and substantially better than the NE at 100 and the South at 95. The US index overall is at 96. REL202304A.xls (nar.realtor)

The cost of housing for many years has increased faster than income, adding to housing disparities, plus the sharp rise the last 3 years due to pandemic prices and mortgage rates, easily outpacing pay raises. It can seem insurmountable to many buyers and renters, especially with the high amount of competition for available housing. Even current homeowners can feel tied to their current home after seeing what the next home will cost them. And with a high number of Americans feeling that real estate is their best investment possible for the last 7 years (see my previous article with Gallup poll), the sharp rise in working from home, plus all the other benefits of homeownership, I see no slowdown soon on the appetite to buy and own homes and a piece of American soil.

Now onto what can be done. I hope this does not come across that everyone can make it ok, I realize that many folks just don't make enough income or have other issues that prevent certain steps from being taken, but I do believe that the vast majority of people have more options than they realize.

Things mainly out of individual control: Lower mortgage rates and adding housing will certainly ease the pain. But lower rates will bring out more buyers and push prices up more. And buying a new or renovated home is very expensive right now. There are a number of agencies assisting lower income buyers/ renters with down payments, mortgage and rental costs. Things more in our control: Combining households can share the high costs. Moving to less expensive areas like the Midwest. Moving to a less expensive part of town like North County or the outlying counties. Buying a home in older condition. Buying a smaller home. Buying a condo instead of a single family. Ask for help on down payment or private/ secondary financing (forgivable loans) from public or private sources. Asking for a raise/ getting another job with higher pay/ getting a second job (good chance of these right now with record low unemployment). Cut back on other expenses/ shop insurance rates and other costs that seem fixed. Lease out a room if your area allows it.

Getting into macro solutions, most housing issues tend to work themselves out thru market reactions (like the i-buyers) given some time. But with the cost of housing showing a long term pattern of outpacing inflation and buyer's income, will it get bad enough that something really big needs to happen, or will people adapt? Will government need to regulate how many rentals one can own (I do not think so on long term rentals, as they still fill a housing need, but maybe so on short term rentals, as they effectively shrink our housing supply, making them available only to travelers), or how many homes one can own without long term renting (too much gov't overreach and too many ways around it, but I believe this is a factor to our housing shortage), or offering more public subsidies to people that need it/ to builders to get lower priced supply in circulation (Maybe in small doses where locally needed, but not sustainable for a shrinking taxpayer base in the long run)? Or will buyers and renters get used to living with other family or friends for longer periods, or living in smaller units, or otherwise adapt to not having as many single family homes on 1/4 acre or more? Perhaps several of these issues can be solved by private industry (think companies who need the most workers close by, especially lower paid workers) subsidizing housing or transportation for a certain percent of their workers, or offer to pay for certain housing costs as a perk like health care or child care, or donate funds to make vacant homes livable, and not only increase our supply but help struggling parts of town increase their residency, lower the crime rate and strengthen the community again. There are numerous non-profits in St Louis right now doing this kind of work, and in cities across the country, but they need more support. If we all pull together, recognize the need, and focus on doing a small part to help, we can not only improve the housing situation, but make our communities better overall.

Now it's easy for me to spout off about all these options, and quite another to take action. I plan to focus on an organization that rehabs homes in North STL city by hiring workers from the immediate neighborhoods. This accomplishes giving work and skills to those who need it, putting rough homes back into use, and making these streets better communities with more residents. I will share the name in a couple months if you wish to get involved too.