Here’s Why Housing is Unaffordable for the Bottom 90%

September 12, 2023

by Charles Hugh Smith Of Two Minds

This is the direct consequence of the Federal Reserve’s decades of unprecedented stimulus: extremes of wealth and income inequality that gave the wealthiest households the means to bid up housing to the point it’s no longer affordable to the bottom 90%.

The superficial conclusion that the reason why housing is unaffordable is a scarcity of housing misses a key dynamic in supply and demand: who has too much money and where do they park it??

The reality is obvious but conventional analysts don’t see it, largely because it doesn’t fit the approved narratives. Here’s why housing is unaffordable to the bottom 90%:

1. The U.S. economy is a bubble economy that funnels the vast majority of gains into the top 10% who own 90% of all income producing assets. Bubbles create astounding sums of unearned wealth and distribute it very asymmetrically: the already-wealthy who inherited assets or acquired them when they were cheap reap most of the gains.