One of the biggest concerns in the United States is the affordable housing crisis. Despite the income, it is affecting both the people of low and middle-income groups. The National Low Income Housing Coalition stated that a renter working 40 hours a week and receiving the basic wage is only capable of only affording a two-bedroom house.
In 2016, researchers from Howard found that more than 35% of people in the United States are facing a financial or affordable housing crisis and living their life while being cost-burdened. Even some people from the high-income group are also facing problems while living in coastal cities. More than two-thirds of the renters say that their financial condition is not sufficient to afford a new house. Additionally, their savings could cover the down payment of the house but it would take years to accumulate that amount of money. Nowadays, the cost of the home is rising twice as per the rate of wage growth.
The Change in Median Wages and Rent from 1960 to 2016
Due to the shortage of supply across the country, the rent has also become too high for the people who belong in the lower-income group. Not to mention, the reality of affordable housing in the United States is a more complicated process than just regular jump-starting construction. Political decisions, market forces, and various changes in the demographics have also made the development process of affordable housing much more difficult.
How one of the greatest nations in the world is facing a shortage of affordable housing and has no proper solution to overcome the problem? Why the buyers and renters are struggling? This is because multiple factors increase the price of affordable housing.
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The Cost of Construction Material
The lumber price is fluctuating for the past couple of years, especially in 2008 where the price became twice as much as the original price. Lumber represents more than 10% of the overall costs of developing s house, and the increasing price of lumber is due to the trade dispute between Canada and United States. The lumbers used in the residential construction process come from the northern regions, added Maxwell Drever. However, the supply has been affected due to the mountain pine beetles that can kill a tree within 72 hours.
Additionally, the increased price of underdeveloped or undeveloped land around the urban centers of the United States is also another great factor behind the increasing cost or unavailability of affordable housing. Many construction developers and home builders now primarily focus on the luxury housing market. This means that they are not considering the affordable housing crisis and enhancing their revenue.
The Cost of Construction Labor
While the rebounding market of housing means more apartment buildings and housing starts, the shortage of labor is also driving both the cost as well as cutting the margins of these projects. This is why they add great economic pressure to the developers who are focusing on higher profit returns, says Maxwell Drever.
The National Association of Home Builders stated that more than 85% of organizing members believe that the availability and cost of labor is one of the biggest issues. This not only increases the competitive building but also makes affordable housing untouchable for many families.
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Conclusion
Construction in the United States has always been a versatile industry. Efforts to enhance deportations, low unemployment, curtail immigration, and the growth of the construction industry is preventing developers to build affordable housing.
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