American dreams still require houses. Too many are missing out

It’s hard to understand what is happening in the American real estate market. There has not been a time in our history that we can use to draw close comparisons. Single-family homes have, arguably, never been in higher demand. Millennials are now the largest home buying force in the nation and they are facing competition for homes on a scale that most of us have never experienced.

Thirty years ago, I bought my first home. A Victorian era house that was way too large for my two member family. I bought it with the goal of “renting out the upstairs.” The term “house hacking” had not been coined yet, and was probably too cool of a term to have been understood at that time. So, I house hacked the upstairs. I needed to because there was more house than I could afford without it. It wasn’t ideal. It was noisy at times, even loud on occasion. I didn’t particularly enjoy the aroma of their dinner. I didn’t always like their music selection, but I needed them to pay rent each month so I could make the house payment. I quickly realized that house hacking was a good idea and soon discovered that owning rental property was an even better one. Life has taken several unexpected turns, but having extra income from real estate investing has continued to pay off despite the ups and downs.

Yes, investors are making it harder for new home owners to get started today. It’s not the mom-and-pop investors that are driving up the costs; it’s the industrial scale Wall Street buyers. In my own neighborhood, several houses have been purchased by investors as rental properties. This includes industrial-sized investors from England. There has always been competition for good homes, capitalism intends there to be.

There will always be people who do not want to live in an apartment. The pandemic has reminded us that most people prefer space. Builders will not catch up with the demand for starter homes in my lifetime. The current level of competition for homes is going to require outside-the-box thinking. The cost of a new starter home is preventing many from even being able to seriously think about homeownership. At a minimum, house hacking should be considered. Manufactured homes should also be considered. Today’s “manufactured homes” bring a level of design and appeal that all homeowners desire. I am all for city planning and HOAs diligently protecting assets, but some thought for expanding the role of manufactured housing must be considered. Does anyone else see the value in a well-manicured, HOA governed, manufactured home community complete with covenants that would protect property values and set community standards? Haven’t the awesome marina communities in Florida shown this concept is possible? Perhaps we should trial this idea in YIMBY communities first? I don’t see anything wrong with the YIMBYs proving to the NIMBYs that it can be done. Couldn’t this type of community be possible on a land cooperative?

This is a long blog to basically say that house hacking and manufactured housing are two ways to offset the high cost of starter homes in America. Our Canadian friends have it even worse. I feel for these kids today, the scale of this problem requires government and private sector cooperation. Remember those days, cooperation between the private and the public sector?

Unless you are Elon Musk, home ownership is the first step in achieving financial independence. Although, we all can see the efforts of some to limit the role of landholding in this country – their toils are unlikely to sway most people. In the words of Yellowstone’s John Dutton, “This is America, we don’t share land here.” I am not a big fan of sharing land either, but let’s at least give everyone a chance to own their own. By chance, I mean the opportunity to creatively work to earn it.