Home Affordability

More and more, I’m hearing discussion pertaining to home affordability. Just last week, I referred to a military service member complaining about how the prices of homes are making home ownership difficult for his generation. Many in West Virginia are aware that the housing market in Morgantown is more expensive than in other parts of the state. At the same time, home prices in some cities outside of our state are significantly higher BUT…not everywhere. Why is this? Well, it’s often based upon supply and demand. It also has a lot to do with employment demographics, as well as interest rates.

Some know, I’m originally from Washington, DC. My former home from about 12 – 15 years ago, is a townhouse near Alexandria. It has 3 bedrooms, 3 ½ baths on three levels. The basement has a nicely finished entertainment room with a gas fireplace and an office which could be used as a 4th bedroom. The living room, spacious kitchen and deck are on the main floor, while the 3 bedrooms are on the top floor. The square footage is just under 2,000 square feet. The price 15 years ago isn’t important. The price now, however, would probably be more than $425,000! If that home was in Morgantown, it would probably sell in the mid $200K range! Yes, the difference is that big! Then consider that folks in most of WV or even in western PA, think Morgantown is expensive!

Now, the cost of housing isn’t always higher in larger cities. It depends on supply and demand as I mentioned. New construction can boost supply but also keep in mind that many cities have lost population over the years. Cities like Cleveland, Detroit, Cincinnati, and even nearby Pittsburgh have seen declines in recent decades. The security of employment also has an impact. We can debate whether Washington, DC should or should not be so secure with government jobs, but for the sake of this discussion, suffice it to say, that metropolitan Washington is relatively recession proof, which leads to a strong housing market. Another factor in high home prices is interest rates, which were artificially low 2 to 3 years ago. THAT created stiff competition among buyers. Do you recall we were having bidding wars 2 to 3 years ago?

There are other small cities like Morgantown with pricey Real Estate. These days, it’s expensive to live in Asheville, North Carolina. It’s a great place to visit but locals will tell you, it’s more expensive to live there than it is in the much larger city of Charlotte.  We also hear about salary discrepancies in WV compared to border states, but we need to remember that people in those states, must spend much more to live. Outside of Morgantown, Bridgeport, Teays Valley, and the Eastern Panhandle, the cost of living in WV, is quite low. Yes, inflation is affecting us at the gas pump, grocery stores and other places, but let’s not forget that we live in a state where our dollar goes much further than in many other parts of our country.