Why U.S. Real Estate Is So Flawed | CNBC Marathon

CNBC Marathon explores the problems with housing in America.

For decades, Americans have relied on mortgages to purchase a home. But experts say that several aspects of today’s mortgage market including cost, the lack of small-dollar loans and lender bias have all greatly hindered Americans from owning their own property. Can the U.S. do anything to fix the broken system and allow mortgages to improve homeownership in America?

And a decade-long slowdown in house building is coming to a close, which could help American renters. But the new developments in construction are generally for high-end and luxury apartment units. Experts say the market conditions are pushing people further away from their jobs and weighing on the economy writ large. CNBC takes a look at why renting is so expensive in the U.S.

The Covid pandemic caused a surge in housing costs and a rise in unemployment, leaving nearly 600,000 Americans unhoused in 2020. So how is the U.S. addressing the homelessness crisis and can the current housing first policy approach solve it?

CNBC Marathon brings together the best of CNBC’s coverage on America’s housing issues.

Chapters:
00:00 Introduction
00:39 Why The U.S. Mortgage Market Is Broken (Published May 2022)
13:51 Why Rent Is Rising In The U.S. (Published Dec. 13, 2021)
22:45 Why the U.S. Can’t Solve Homelessness (Published Jan. 2022)

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Why U.S. Real Estate Is So Flawed | CNBC Marathon

[Rochelletrem]

As a realtor in my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.

[mikey]

I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.

[bobbymainz]

In spite of how everyone is frightened and calling the crash, there is already an excessive amount of demand waiting to absorb it, which is another reason it's less likely to happen that way. This forecast was not made in 2008, at least not by the general public, as I will explain below. The ownership rate peaked in 2004, according to the other comment. We reached a peak in the second quarter of 2020 and are currently at the median level. From 2008 to 2012, it fell by 3%, and in the second quarter of 2020, it dropped from 68 to 65.

[Raymondjohn]

I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!

[That-Guy_]

Make it illegal for corporations to own single family homes

[Sunnyso]

It’s not just the interest rate. It’s the cost of the house itself. It’s ridiculous!

[andrewchandler]

The effects of the downturn are beginning to sink in. People are being impacted by the long-term decline in property prices and the housing market. I recently sold my house in the Sacramento area, and I want to invest my lump-sum profit in the stock market before prices start to rise again. Is now the right moment to buy or not?

[simonbad]

My advice to new investors buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless. I’ve only ever saved($510, 000), never invested but want to start.

[priceless]

Stop investors from buying all single family homes.

[Sheil-hard]

Real Estate provides cashflow, tax benefits, equity building, competitive risk-adjusted returns, and inflation protection on its own. Whether you invest in physical properties or REITs, real estate may help you diversify your portfolio and reduce volatility. Dividends are what got me into investing in REITs, great way to secure the accumulate wealth, I hold AMT, CCI & PSA. $290k in profits made in 2022.

[PARADISE]

People can afford to pay 3k in rent a month but dont qualify for a house with a monthly payment of 2k

[ExxonMobilCompany]

Anyone have any idea which stocks may be experiencing major growth this new year season? A lot of people have been talking about a January bounce. I recently sold my Boca Grande, Florida, house, and I want to invest a lump sum before equities recover in the stock market. Is now a good time to buy or not?

[Nar]

When I was in real estate it became clear to me that in the states the only focus is getting commission for the realtor and selling houses quickly as well as prioritizing investors over everyone else I was absolutely appalled by it and left that greedy industry behind. Housing is a right not a privilege that’s truth and a house shouldnt primarily be an investment tool it should be a home first and foremost

[joesphcu]

Many talk about the lack of liquidity in real estate as a “glitch.” I see it as a feature. It’s too easy to liquidate stock positions sometimes after reading a sensationalized headline, only to regret that decision soon after.

[jessicamoore]

Residential real estate depends on the willingness of people to borrow for what’s typically the costliest purchase of their lives. As the Fed continually jacked up interest rates last year, the average rate on a 30-year fixed mortgage topped 7% last fall — more than double where it began 2022 — before dropping back slightly.I'm still at a crossroads deciding if to liquidate my $338k stock portfolio, what’s the best way to take advantage of this bear market?

[bravehats]

Someone bought a house in my neighborhood in early 2020 for 412k, in 2021 he sold it for 675k. Now in 2023, the person that bought it for 675k in 2021 has put it up for sale again for 730K. So in 3 years, this house as increased by 318k. Abosultly not sustainable for the economy. Reducing interest rate is not the answer, it will only contribute to higher home prices. I'll rather interest rate stay between 6% to 8% for the next 10 years. This will gradually reset the market to normal levels, because it will force sellers to keep cutting prices.

[JHZech]

Focusing on the mortgages is misguided. The base cost of housing is too high because single family zoning has made it illegal to build duplexes, condos, townhouses, etc and choked off supply.

[alexsteven.m]

After a nightmarish 2022, shell-shocked investors have losses to recoup and plenty to ponder, as an inflation report and a raft of other data did little to change expectations that the Federal Reserve would likely continue hiking intrest rates even if the economy slows down, Which means more red ink for portfolios for the first quarter of year 2023. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my $250k bond/stocck portfolio

[willdazey]

In my experience, one of the worst things about the housing market are all the real estate companies buying up cheap houses and flipping them for insane profits. I look at the price history of all these homes that I am interested in and keep seeing real estate companies buying up homes, only to relist them 6 months later at twice the price! It should be criminal to do this.

They go to the auctions, they know what's on the market. They are already positioned to be the first person there to buy the house with cash on the spot. Then, they do nothing to renovate, they just add $100k to the price they paid! They can even sit on the house for a couple years cause property tax doesn't even compare with the eventual payout they will get for selling.

[ILWUEver]

It seems to me that greed out performs compassion in the U.S.A. Sucks.