Everyone Wants to Buy a House, but No One Wants to Pick Up a Hammer
You guys. It's rough out there. Let me just say that I empathize with anyone dealing with eye-watering rent increases, or worse, eviction notices. It's bad enough that some real estate agents are taking this crisis as a chance to bully you into buying a home rather than "paying someone else's mortgage". I've heard some even go on air saying "It's only going to keep going up, better get in now before rates increase again!" Hmm, sound familiar, anyone?
I'm not implying we are right back in the cycle as we were in 2008. Many dynamics are different now, and thankfully so. Can you believe you used to be able to get a mortgage simply by stating your income? Good thing it's harder to get a mortgage now.
And that's if you get a mortgage at all. I couldn't believe my eyes when I read that almost a third of all home purchases are all-cash. Who has $500k just lying around? It's not your cousin Jill who works as a teacher. It's older Americans retiring and downsizing, it's investors, and, in my opinion, people with too many stock options.
Wait, I can't even afford my rent anymore?
Back to the renter situation, it's equally surprising that landlords can demand such high rates, even in places that were normally considered affordable like suburban Phoenix or Atlanta. When I lived in Denver, I thought my friends paying $2,200 for a one-bedroom apartment were out of their minds. Albeit, they were in prime downtown locations with amazing amenities, and boasted sustainability features. You guys know Financial Fives is all about sustainability, though I'm not sure about paying a $500 per month premium just because a building says it is "sustainable" because you can walk to a bus stop.
How did prices go up so fast, and so precipitously? A lot of people think it has to do with the return of people to cities and the end of eviction moratoriums. I wonder though, is it a housing shortage we have on our hands? With the cranes littering downtown skylines wherever you look, there has to be a lot of empty units. Maybe I'm wrong.
On the side of buying homes, does anyone else remember a more competitive housing market? I've even spoken to realtor friends in various markets who have been doing this for 40 years, and they say this market is another animal, far beyond anything they've seen in the past, even the mid-2000s market.
Rent is up, so what about my income?
What do they say is the cause? Supply. Everyone with a microphone is out there saying we have been underbuilding our housing since the market crashed over a decade ago.
Though if that's the case, is there a reason it spiked as fast as it did after the pandemic? Wouldn't it be a gradual increase in prices like we saw in the decade of 2010-2020?
I'd like to throw another spark in the magic pot. No one wants to work anymore! Kidding. I'm not jumping on that train that blames the worker shortage on people mooching off government benefits. (I mean maybe SOME of that is to blame).
What I'm referring to is a trend over the years of people shying away from manual labor to more office-like work. Now don't get me wrong, I'm impressed by people who do "before and after" photos of fixing up their homes. New paint, a built-in entertainment center, or fresh countertops are excellent DIY projects. Nothing like having a vision come to reality after some sweat equity!
What I'm referring to is the bigger picture. Actually building a house from the ground up, hence the "no one wants to pick up a hammer" in the title. Don't worry, I'm in that camp too. Though I will tell you that if I earned the same as a construction worker as I do in my current career, I would have no problem making the change. Yes, it's hard, dirty work and you're working in the frigid cold or blistering heat. However, it's honest work. Haven't you driven through downtown just mesmerized at the talent of humans? We can build amazing structures, some higher than 100 stories.
Every time I visit a new neighborhood, especially swanky custom homes, I'm just amazed at how these people make a sketch or blueprint become reality. Literally taking the dreams of a customer or architect and creating it from nothing.
No I don't know how to install a sink, let me Google it
We've changed as a society as far as what we value. Professional baseball players make more money than garbage collectors. Some YouTubers who make reaction videos make more than construction workers who build the homes we live in. How would your life be impacted if you didn't have the lower-paid ones? Want your trash to stew outside your driveway in the summer? Taking for granted the fact that your house hasn't collapsed as you watch TikTok videos on your bed?
Now before you lecture me, I do understand there are the factors of capitalism at play here. Some of those who make crazy money on YouTube videos are paid that much because they are GENERATING money for the companies that place ads on their videos.
At the end of the day though, WE are the ones who are making them that money by watching those videos and clicking on ads and affiliate links!
I'm not saying don't watch videos. That's probably going to be as effective as telling you not to eat ice cream in the summer.
I'm just hoping that as a society we bring back the values of hard work, working with our hands, and appreciating the mission of creating something of value from raw materials.
If you've dug a little deeper, you've probably noticed there is another factor at play other than the cost of materials. A labor shortage. If people can make more day trading, creating on YouTube, or doing a podcast in the comfort of their air-conditioned home, then who wants to do the back-breaking labor of lifting lumbar or digging irrigation lines in triple-digit heat?
As far as I know, robots can't build houses. 3D printers can do some pretty cool things, but until they can build a house like talented tradespeople, I don't think I'd want to live in one.
What do you think? Should we create more incentives for people to work in the trades? Should we stop asking students what they want to major in or what college they want to go to? Comment below and let me know!