Affordable housing crisis looms before elections

As President Biden courts young voters and resists negative perceptions about his handling of the economy, an economic issue looms over the upcoming election: a historic lack of affordable housing.

The cost of buying a home has reached an all-time high, and although rental prices are down slightly from their 2022 peak, Americans in both red and blue districts are feeling the crunch.

A White House Report released in March found that while incomes have doubled since 2000, housing prices have tripled, meaning housing prices have risen 50% faster than income over the past two decades. The median home price recently hit $383,725, a record 5.2% increase from a year ago, according to real estate firm Redfin.

The average 30-year fixed mortgage rate has climbed back above 7 percent as a recent wave of strong inflation and economic data push back the deadline for the Federal Reserve to reduce borrowing costs. The US is also short of nearly 4 million homes, according to for a recent study by Up For Growth commissioned by the American Planning Association.

Casey Dawkins, a professor of urban studies and planning at the University of Maryland, has identified two culprits for high housing prices that date back to several presidential administrations.

“New housing production fell sharply during the 2007-2010 foreclosure crisis and has not recovered since. Several factors are responsible for this, including increased construction costs due to supply chain disruptions and local land use regulations that increase the time, cost and uncertainty associated with obtaining a development permit,” wrote Dawkins.

“With growing income inequality, there are now more people earning incomes below what is necessary to buy an adequate home.”

In this real estate market, it’s no surprise that the lack of affordable housing is weighing on voters’ minds. Just over 53 percent of homeowners and renters say housing affordability will impact who they vote in the upcoming presidential election, according to a report by Redfin launched in March.

“I think this just shows that [housing affordability] it’s weighing on people’s perceptions of who they want to vote for,” Daryl Fairweather, chief economist at Redfin, told The Hill.

Biden is battling negative perceptions about his management of the economy as he prepares for a rematch against former President Trump, the presumptive Republican nominee. Just 34 percent of voters approve of the way Biden has managed the economy, while 29 percent approve of the way he has managed inflation, according to a recent CNN pollwhich also found that Trump has a 6-point lead over the incumbent.

Housing costs are a major drag on persistent inflation, which rose 3.5% in March from a year earlier, according to the latest data released by the Labor Department. Housing costs, which increased 5.7 percent over the previous year, accounted for 60 percent of the total annual increase and were “the largest factor in the monthly increase in the index for all items except food and energy.”

High interest rates, which the Federal Reserve raised to a 22-year high last summer, have also increased borrowing costs. The central bank is not expected to cut rates on Wednesday and has signaled it is delaying the timetable for cutting rates, meaning the cost of buying a home is likely to remain elevated for longer than initially expected.

The president took precious time during this year’s State of the Union address to praise his administration’s efforts to make housing more affordable, “reflecting the fact that they recognize that there is growing public angst about affordability and that Washington is still grappling with what to do about it,” said Jeb Mason, partner at Mindset and former Treasury Department official during former President George W. Bush’s administration.

Biden’s budget proposal for next year, which reached the Republican-controlled House, included several provisions aimed at reducing housing costs, such as expanding the Low-Income Housing Tax Credit, creating a New Home Tax Credit and subsidies to encourage states, local governments and tribes to build more homes.

The president also called on Congress to pass provisions aimed directly at first-time homebuyers, including a mortgage relief credit and funding for a down payment assistance program.

Congress is considering a series of measures to alleviate the high housing prices that are taking a toll on its districts. While some lawmakers made partisan attacks during recent hearings on housing affordability, there are several bipartisan proposals in this Congress.

These measures include the Rural Housing Service Reform Act from Senators Tina Smith (D-Minn.) and Mike Rounds (RS.D.); Affordable Housing Lending Improvement Act from Reps. Darin LaHood (R-Ill.) and Suzan DelBene (D-Wash.) and Sens. Maria Cantwell (D-Wash.) and Todd Young (R-Ind.); and Reps. Mike Kelly (R-Pa.) and Brian Higgins (DN.Y.) and Sens. Ben Cardin (D-Md.) and Young’s Neighborhood Homes Investment Act.

Mason, who advises businesses, lawmakers and other stakeholders on housing and financial regulation issues, said “there is a bipartisan appetite to do something, I think the question is exactly what can realistically be done in an election year before people come into full action.” campaign mode.”

Rep. Jimmy Gomez (D-Calif.), who chairs the Congressional Renters Caucus, told The Hill that he “frequently hears from people who are frustrated.” Gomez represents part of Los Angeles, which Redfin found to have the highest median housing price and the HUD report found to have the second-highest homeless population after New York City.

“Home ownership is fundamental to the American dream, but it is out of reach for many Americans who are forced to rent,” said Gomez, who is working to significantly increase federal funding for rental assistance in the government’s new spending package. .

“Maintaining current federal levels is woefully inadequate and does not meet the scope of the current housing crisis,” he said. Gomez also recently proposed new monthly tax credits specifically for middle-class renters “to help bridge the income-to-income gap, with tax credits that put money directly into workers’ pockets.”

But Fairweather said that “a lot of the things that seem all-encompassing, like homebuyer credits, down payment assistance, that kind of thing, don’t solve the problem either.”

“We really have to solve supply issues,” she said.

Angela Brooks, president of the American Planning Association, the membership organization of planning professionals such as urban planners, told The Hill that increasing housing supply “is a national challenge and requires a national response.”

“In many cases, localities are harmed by local opponents who are afraid of change. And while housing action is a priority in many states, it is not moving fast enough in the way we need to alleviate supply challenges. That’s where federal partners can play a big role. Housing supply and zoning reform are one of the few issues in Congress that are gaining bipartisan traction right now,” Brooks said.

Rep. Nanette Diaz Barragán (D-Calif.), who co-chairs the Congressional Caucus on Homeless and also represents parts of Los Angeles, told The Hill that “congressional action is necessary to deliver essential investments and protections to our communities that will provide more affordable housing and keep families housed.”

State and local governments have struggled to manage the growing number of homeless people in their communities. More than 653,000 people were experiencing homelessness last year, an all-time high last year, as a result of rising housing prices and the end of pandemic-era assistance, according to a report released in December by the Department of Housing and Urban Development (HUD). ).

“Congress can, and should, do its part to create more flexibility and invest more in federal programs like the Housing Choice Voucher, HOME, and the Homeless Assistance Grant Program, provide strong protections for tenants, and reform regulations federal agencies that make the work of our local partners difficult. ability to increase our supply of affordable housing,” said Barragán.

But some cities and states have resorted to more punitive measures, including fines and arrests, and the Supreme Court last week heard a controversial case that could strengthen its authority to enforce anti-loitering and anti-camping laws.

Dawkins doubted that cracking down on homelessness would solve the country’s housing crisis.

“Penalizing homeless people for sleeping in public spaces will do nothing to alleviate the national homelessness problem; this will only change the geography of the problem, forcing those without shelter to move to other communities,” Dawkins said. “To attract more people into homes, we need to build more housing.”