Home Prices Rise Despite Less Demand, What Gives?

One of the biggest drivers in price is in fact supply and demand. But the cost of building new homes is going up mostly due to government over regulation. Builders continue to face new laws forcing compliance with various environmental, local infrastructure, and safety that all seem great but absolutely increase the price of construction. Many builders are pulling out of over regulated areas like the three West Coast states. Despite having fewer buyers in the market place, there is also fewer new homes and this drives the price up on the remaining available resale homes. 

The median home price in Clark County currently sits about $550,000 depending on the source of data. That median price buys a pretty solid house, such as a 30 year old two story 4 bedroom house with 2000 SF or a really nice 30 year old ranch house with 1700 SF. New homes similar to these on any kind of decent sized lot are at least $100k more.   

Younger people struggle to afford to buy homes largely based on social tendencies more than actual costs. Homes have appreciated at significantly more than inflation in general over the last 40 years and many YouTubers point this out. But I was a 20 something in the 1980s and can assure you that buying a house back then was more difficult that it is today. Interest rates in the 1980s started out at 18% and dropped into the 11's by the end of the decade. That's a huge hurdle. But the 1980s had much higher costs on most things we buy today. Where the modern homebuyer faces higher education costs, higher healthcare costs, but lower costs on gasoline, utilities, food, electronics, and appliances. We did just come off a high inflation period that has brought some of these "lower" costs to parity with the 1980s but we also are seeing pretty strong wage increases in recent years that match it.

The general gist here is to stop complaining about how hard it is to buy a home, it has ALWAYS been hard to buy a home. I see people complaining about their inability to afford a home and then realize they have a brand new $1000 phone, a brand new car with $500 payment, they are drinking 4-5 energy drinks every day at $2-$5 a piece! They are wondering where all the money goes? 

Buying a house has always required some difficult penny-pinching and that still holds true today. I help young people all the time to get into a house, It is rarely easy unless that young person managed to find a six-figure job, but it isn't as hard as the internet is telling you.