Confronting the Affordability Crisis in Real Estate | Innovative Solutions & Trends

Dated: December 7 2023

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Confronting the Affordability Crisis in Real Estate | Innovative Solutions & Trends

December 6, 2023 by Jason Son

When’s the last time you saw real estate and affordable go hand in hand? It seems like the gap between these two segments is growing wider and wider each year. When does it stop? Will it EVER stop? In today’s video, I’m going to confront the problem that many of us face, affordability. And I’ll also show you how we can eradicate this issue so You can navigate in today’s challenging market.   


Hi my name is Jason Son and welcome to the channel. If you haven’t already, hit that like button, and subscribe to the channel so you’ll be notified as soon as my videos hit. I provide tons and tons of value and content through this channel. Let's grow together and make this channel your ultimate guide to success. 


Affordability is in crisis mode. There are lots of younger and older generations and families who are seeking the American dream of homeownership, but they can’t attain that right now. In recent years, we've seen a significant shift. Mortgage payments have surged since 2021, with a steep incline in interest rates. Just take a look at how much the mortgage payments have increased since January of 2021, even since January of 2022. This has profound implications for homebuyers. It's not just the numbers that tell the story – it's the impact on everyday families, young professionals, and retirees dreaming of homeownership. 

To fully grasp the current situation, we need to look back. From 2016 through 2022, mortgage rates were comfortably under 5%. This stability played a key role in housing decisions. However, the sudden increase in 2022 and beyond has rewritten the playbook for home buying. As of November 5 2023, the mortgage rates came down slightly over the weekend to sit at 7.38%. So we are currently well above what a lot of the millennials and gen xs have seen over the past few years. And if we take a look at it from a decade, we can also see that in the 2000s the mortgage rates weren’t as high. So we are in a situation where mortgage rates are impacting affordability in a very, very big way. Understanding these trends is crucial for making informed decisions in today's market."

Now you may be wondering, are there people buying houses in this affordability crisis? Let’s take a look at how many people were planning to buy a home in the next 12 months via percentage. This is a survey from the housing trends report at the National Association of Home Builders. 

And what we can see is things were going down 18 into 19 and obviously in the first quarter of 2020 when we had the pandemic. Then all of a sudden things shot out, they settled back out from that big jump because of the pandemic buying and then they bounced around. But if you look from 2020 to now, that’s not going down. If you look from just 2023, what we’re seeing is that it’s bouncing up and down. If people were no longer interested in buying a house, that line would be down headed toward the bottom right-hand corner, not the upper right hand corner. So the desire is still present but many people have challenges achieving that because of the affordability issue.


So how do we combat this Crisis? One key idea is multi-generational living. Now, some of you're going to say, "Wait a minute, you're saying I have to live with my mom and dad? Wait a second, you're saying me and my wife have to live with my son and daughter and my grandkids? That ain't never going to work." And for a lot of people it's not going to work. This is not a solution for everyone. But a study done by Pew Research says that it works for a lot more people than we thought it would. 58% said it's convenient most of the time. And if we think about that, that makes sense. The young couple who have kids, they have a built-in babysitter. They can go out for a romantic dinner, they can go away for a romantic weekend and the grandparents can spend time with their grandkids. For the grandparents, usually as they get empty nesters, what do they bring in? Pets. What's the biggest challenge for them if they want to go away for a weekend or go away for some time? Who's going to watch the pets? Well, they have built in pet sitters. This is important because we realize it's convenient for a lot of people. Another thing, more than 50% said most of the time it's rewarding. Imagine grandparents, their adult children and their grandchildren all living together, helping each other out. Isn't that what family is about? So I do think this is something that we should take a look at and something that we should really grab hold of. Not for everyone. Look at the last bar, 23% find it stressful. So obviously if you hate your parents, don't move in with them. If you hate your adult kids, don't move in with them. But if you don't trust your adult kids to raise your grandchildren, which a lot of grandparents are in that category sort of kind of. Half joking, half not, then this makes perfect sense because the grandparents could spend more time with their grandkids.


Triangle Business Journal said The circumstances over the past few years-bewteen the 2008 financial crisis and the COVID -19 pandemic-have changed the way families are buyihng homes. According to data from the National Association of Realtors, Multi-generational buying rose to and all-time high in 2022: 14 percent. Compare that to 2021, when this option was as 11 percent. So we are really talking about a 30 percent increase in the number of people buying multigenerational homes. And more than one out of 10 houses that are sold are multigenerational homes.


This is from Pew Research. Multi-generational living has increased among all age groups over the past five decades. But the increase has been fastest among adults, ages 25 to 34. This could be one of the answers toward the affordability challenge that you are facing right now. And people jump out on this already. Builders are now developing multi-generational floor plans that include designs with two master suites, including main floor suites with kitchenettes. Many offer shared spaces for gathering to the extended family while also providing additional privacy when it's needed most. Some include flex space that can shift from a family office to a nursery to give you the ability to adapt. Some include detached casitas, living options for even more privacy for your family.

In light of these trends, government policies and financing options are evolving. The FHA and Fannie Mae have introduced measures to make multi-family homes more accessible. The federal government understands that we have an affordability challenge. This is one of the ways that they're trying to help. They're throwing money at this particular answer. Also in a significant policy change, Fannie Mae has announced that it will accept the 5% down payments for owner occupied two, three, and four unit homes. This marks the departure from the previous multifamily financing requirement of 15 to 25% down. Sonow they're even doing the FHFA with the ADUs, the accessory dwelling units. But now even Fannie Mae is saying, "Hey, listen, if you buy a two family house, you buy a duplex, your parents live on one side, you live on the other side, we'll let you buy that house with 5% down."

So, could this be a potential solution for your affordability crisis? Let me know in the comments below, I would love to hear from you guys. If you have any questions or need a quick chat, all my contact information is down below, you can call me, text me, message me, or get on my calendar for a zoom call. I hoped today’s video was helpful and insightful during this affordability crisis. Don’t forget to like and subscribe to the channel for more updates and insights and remember, In sold we trust. 

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Jason Son

Hey there! I'm Jason Son, your trusted guide in the vibrant world of Dallas real estate. Whether you're buying your first home or looking for your next investment, my expert advice and market insights....

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