We're entering year three of a scorching hot housing market, but even if the economy recovers as expected, that won't immediately solve the housing supply shortage across the U.S. The shortage existed before 2020, but the pandemic made things even worse.
There's a lack of materials due to supply chain bottlenecks, and building companies have struggled to fill jobs amid the great resignation. Low supply matched with high demand has sent prices soaring.
"Homes that were $380,000 are now $520,000," developer Ed Pavicic said.
The average household income in America is just over $67,000, and if you follow the advice of conventional financial planners, you shouldn't buy a home worth more than three times your salary.
That means the average household should shoot for a home around $200,000. However, that's half of what they're going for these days, on average.
The good news is some experts say a turnaround is coming as the U.S. Federal Reserve prepares to raise interest rates.
Chairman Jerome Powell said earlier this month that interest rates could rise at least three times or more this year if inflation doesn't fall. But it's still unclear how quickly that will happen, or just how much it might bring prices down.