When Housing Becomes Unaffordable

A friend recently sent me an article detailing how Seattle has a major homeless problem (with the accompanying scourges of drug use, violence, and property crimes). It’s definitely sad to see. I’m intimately familiar with the growing 21th century phenomenon of unaffordable housing, having grown up in the SF Bay Area, which dealt with these issues decades before Seattle (and Portland). Realistically, I anticipate that the forces driving unaffordability will only get worse over time. Real estate in downtown cores of desirable cities, like Seattle, San Francisco, Vancouver, and London, is priced as an investment asset rather than a place for locals to live. There’s just no way middle class workers can compete with large pensions, hedge funds, sovereign wealth funds, and billionaire tycoons for property.

What can we do? Certainly economists have developed ways to combat homelessness through subsidies and affordable housing mandates. Others seek to curb foreign investment in housing or extract large taxes from absentee/nonresident homeowners. Those strategies will only go so far if we don’t address the fundamental issues of inequality. There’s simply too much wealth sloshing around looking for things to invest in. Nevertheless, I try to stay away from politics on this blog, instead preferring to approach things from an microeconomic perspective. As individuals, we’re unlikely to have much effect on changing things at a larger systems level, so all we can do is adapt, adjust, and try to survive.

How can we do that? Check out my book on wealth for tips on how to make enough money to buy that expensive house, how to structure the mortgage, as well as learn lifehacking tricks for how to compensate for expensive housing.

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