“Supply and demand regulate nearly every aspect of our economic lives,” said Jeff Hayward, EVP, Multifamily at Fannie Mae. In a perspective blog entitled, “Affordable Housing Crisis Demands Renewed Focus on Housing Supply,” Hayward pointed out the plight of buyers seeking reasonably priced homes in a market with an insufficient supply of such units.
“In communities across the United States–from our fastest-growing cities to rural towns–imbalances between supply and demand have persisted. Rather than self-correcting, in many places, they have worsened over the last decade. In most cases, these imbalances have been exacerbated by a complex set of policies, incentives, and disincentives that have sharply limited the available supply of moderately priced homes and apartments,” he said.
Speaking of single-family homes, Hayward noted that according to Fannie Mae's analysis of housing data, the inventory of existing single-family homes for sale has declined over 30 percent nationwide since 2011, while the nominal price of homes sold has increased by 57 percent.
He cited the inadequate single-family construction in the current expansion relative to job growth as the reason for the insufficient supply of both new and existing homes for sale. “First-time homebuyers, especially baby boomers, are staying in their homes longer, limiting the supply of starter homes for new first-time homebuyers as well as the supply of ‘next homes’ for growing families looking to buy up,” he said.
“That is a key reason why the supply-price imbalance for moderately priced homes – those most attractive to new households or first-time homebuyers – has been even worse than higher-priced homes,” Hayward added.
Commenting on apartment seekers, Hayward noted that they have it bad as well as low to moderate incomes has remained static since 2010 at a time demand for these units has been brisk. Most new apartments are targeted at higher-income renters even now and have resulted in rents outpacing wages nationwide most major U.S. metropolitan markets. He also addressed the dilemma faced by the entire mortgage market in an environment where housing is becoming expensive by the day in an industry facing difficulties in making mortgages sustainable. However, he noted that “the supply of mortgages may be adequate, but clearly, the supply of homes is not.”
Hayward also touched upon Fannie Mae's efforts in tackling housing affordability and the significant role of innovations and partnerships in renewing the focus on housing supply.
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