Why are houses so expensive?

Why are houses so expensive?

Jordan Goodman (Personal Finance Author) gives expert video advice on: Why is life so expensive?; Why are things so expensive?; How much is the cost of living expected to go up in the coming years? and more...

Houses are expensive because the cost of materials going into them has gone up a lot. Lumber and copper for all the plumbing and electrical - all the components of houses have gone up a lot. But also there's been a speculative binge in houses in the last few years. That's certainly cooled in the last year or so, but in many cases, people are getting into houses as a way to invest, as a way to flip and to make money by buying and selling the house itself. So that's made the house price go up a lot. With interest rates having gone up, it means the cost of houses is a lot higher. And also property taxes. To support local communities, lots of property taxes have been going up as well. So the cost of housing is not just the house itself, but it's the mortgage, it's the property taxes, it's the utilities, it's the upkeep. And that has risen to very, very high levels making many houses unaffordable for people. I heard a recent statistic that at current prices in California, only 16% of people in California could afford the home they are living in today. That is, they bought this home years ago but because the price of utilities, property taxes and other things have gone up, many many people could not afford the house they live in today. And that's making it more difficult, particularly for the first-time homebuyer to get started buying into homes.