Not enough homes are being built and rents are outstripping wage gains.
There is an economic crisis happening in the housing market. The working class is finding more of their wages sucked into the housing financial puzzle. Stagnant wages combined with rising home prices and rents are putting a lid on household formation. It probably doesn’t help that many young families are caught in the low wage economy. Before purchasing a home, you probably want to ensure a secure paying job. Many are also reluctant to purchase given that they are already carrying a heavy burden of student loans. The housing crisis is being heavily reflected on home prices, rents, and the lack of household formation. When all of this is combined we find that construction spending is a small part of GDP when in most recoveries, it is a sizable portion of gains.
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