How Did the Housing Market Get So Unaffordable for So Many?

For years, housing affordability was largely an issue that plagued the  working class in  urban areas.

But in recent years, the problem has spread well beyond the working class and is now firmly entrenched in the middle class.

If we scratch a little below the surface, it reveals that the recent volatility in the housing market has been a long time in the making, and that achieving stability will require leaving behind outdated policy frameworks.

Years of underbuilding

Midway into 2022 the Federal Reserve put the kibosh on the boom. 

With its aggressive rate increases and the selling of assets on its balance sheet—including mortgage-backed securities—the average 30-year fixed mortgage rate has roughly doubled, from just over 3% at the beginning of the year to about 6.5% today.

Questions that policy makers are going to be pressed to consider.

First is the wisdom of using interest-rate increases to tame inflation when housing is one of the sectors most sensitive to credit availability. 

The land-use and zoning regimes that have governed housing production in our cities and suburbs for decades ought to be rewritten for the 21st century.

WSJ 12 december 2022

https://www.wsj.com/articles/housing-market-prices-unaffordable-11670604049