Sooner or later every real estate boom comes to an end. Real estate has been the poster child for a “V” shaped recovery during the COVID-19 economic recovery. But now, that real estate exuberance is facing an affordability plateau that might finally dampen some of the irrational exuberance.. There are two strong economic forces at work here. Both involve the lack of affordable housing. There can be no denying that the U.S. is experiencing the highest level of demand for affordable housing since millions of servicemen returned from WWII.
The WWII Housing Boom That Reshaped America
The G.I. Bill almost single-handedly built the American middle class by addressing the core social needs of unemployment, education, and health care. And importantly, it did so through government-backed, low-interest, fixed-rate mortgages with zero or low-down payments with up to 30-year terms. In effect, the G.I. Bill put homes within reach of all but the poorest American vets. The American suburb was born.
It was several years earlier when President Roosevelt laid the groundwork when he said, “A nation of homeowners, of people who won a real share in their own land, is unconquerable.” This was an affordable-home revolution from our past. But what does that have to do with today’s need for affordable housing? More than a little. Although the 20-year war in the middle east is ending, there will not be 15 million vets coming home in search of a family home. But there are still millions of Americans in search of an affordable family home.
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