In most presidential election years, home prices are not an important issue for voters or a major issue in the campaign.
Let’s look at the 2024 election from a different perspective, which is not typical. The affordability crisis is gaining increasing attention as the campaign season heats up, with mortgage rates rising and home prices out of reach for many first-time buyers.
President Biden gave a speech on home affordability in the key battleground state of Nevada in March, proposing a $10,000 tax credit for first-time buyers and those selling starter homes.
Donald Trump fired back in a campaign video, accusing Biden of waging an “all-out war on the suburbs” that would undermine home values by expanding affordable housing options.
In addition to Nevada, the election will be contested in only six battleground states: Arizona, Georgia, Michigan, North Carolina, Pennsylvania, and Wisconsin. In 2016, Trump won every state except Nevada, but in 2020, Biden won every state except North Carolina. Unless the electoral map changes dramatically by November, neither candidate will be able to win this year’s election unless they carry at least three of the battleground states.
The debate comes as housing affordability reaches its worst levels on record.Nationally, the median list price has increased 28% since January 2021, and the home price-to-income ratio has Best ever The ratio has increased from 4.1 to 1 in 2019 to nearly 6 to 1.
The cost burden for renters is also shockingly high, with nearly half of renters in the U.S. spending more than 30% of their income, and a quarter spending more than 50% on monthly rent. us census data. These high rent burdens can make it difficult for many renters to save up for a down payment on their first home.
“Homeownership has long been an important part of the American dream, but when people feel like it’s becoming unaffordable, that’s when it becomes a big part of the electoral equation,” said Daniel, chief economist at Realtor.com®. It will be reflected in their attitude.” Hail.
“It’s not surprising that when people feel that the market itself cannot meet their needs, they turn to politics to try to find solutions,” she added.
Biden’s proposals to increase affordability
Earlier this year, Biden unveiled an ambitious set of proposals aimed at lowering housing costs in his State of the Union address. It includes a two-year tax credit of $5,000 per year for first-time home buyers, and a similar one-year tax credit of $10,000 for first-time home buyers.
“We know that housing costs are very important to you,” Biden said in his annual address to a joint session of Congress. “If inflation continues to fall, mortgage rates will fall as well. The Fed acknowledges that, but I’m not waiting.”
Biden has also proposed a variety of tax credits and spending programs that his administration says could help fund the construction or renovation of 2 million homes.
“Many of these proposals must first pass Congress, a particularly difficult task in an election year, but their inclusion in the speech is “This highlights the sharp rise in housing costs for Americans across the country.” This was stated in a memo regarding Mr. Biden’s speech. “Housing affordability is an important issue for Americans across all demographic and political divides.”
But Biden’s proposed tax credit for first-time homebuyers has drawn harsh criticism from some economists, who warn that a surge in demand could lead to higher home prices. These critics warn that subsidies for home purchases could lead to bidding wars and price increases as tax credits attract more buyers in a market already suffering from inventory shortages. There is.
Nicholas Irwin said: “It’s nice to have policy discussions, but many of the solutions the administration is offering are focused on the demand side, when it’s the supply side that really needs to gain momentum.” It looks like it.” , Associate Professor of Economics and Real Estate at the University of Las Vegas.
“I don’t think subsidizing the demand side will solve the problem of rising house prices,” he added. “We need to build more homes, taking into account the fact that people want to live in homes.”
Meanwhile, Biden’s proposed tax credits for sellers could increase available inventory by encouraging homeowners to trade up, said Mr. Biden, a professor of urban policy at The New School and a master’s student in public and urban policy. Alex F. Schwartz, director of University of Milan School of Policy, Management and Environment.
“We recognize that there is a kind of impasse with people who are not really interested in putting their housing units on the market due to the fact that this is a very favorable interest rate. so that you can apply that tax rate when you buy,” he says of the tax credit for sellers. “So this will help moisten it a little bit.”
President Trump’s harsh counterattack
Trump, a Republican candidate who initially made a name for himself as a real estate mogul, has gone in the opposite direction, arguing that Democratic efforts to boost housing prices amount to a “war on the suburbs.”
“The woke left is waging an all-out war in the suburbs, and their Marxist crusade is coming for your neighborhoods, your taxes, your public safety, and your homes,” President Trump said in a recent campaign video. said. “They will use the power of the federal government to destroy your property values by eliminating single-family zoning and building huge apartment complexes in the suburbs and next to your home.”
The comments echo President Trump’s calls to limit construction in the suburbs during his presidency, when housing affordability was also a simmering issue.
according to freddie macThe country’s housing shortage surged 52% between 2018 and 2020 during President Trump’s term, reaching a shortfall of 3.8 million units.
“His record on housing has been terrible. He’s against fair housing,” Schwartz said, adding that it’s hard to take President Trump’s statements on the subject seriously.
President Trump’s comments on housing appear to be aimed squarely at existing homeowners, who fear that any efforts to reduce housing costs for others will erode their own equity. The aim is to exploit this concern.
These concerns have long been a powerful force driving anti-development attitudes, but they are often irrational, argues Kenneth Chilton, an associate professor of public administration at Tennessee State University.
“The fear mongering is intense,” Chilton said. “If you live in a more affluent area, the price of land is so high that no matter what units you build there to increase density, they’re not going to be cheap housing. , because the high price of land necessitates the construction of more luxurious homes.
“Some studies are beginning to show that this move toward densification does not negatively impact property values; in fact, it may increase property values in certain areas,” he added. .
A more legitimate concern, Chilton said, is the prospect that rising home values in working-class suburbs could drive out middle-income buyers.
Two opposing messages for two different voting blocs.
To be sure, housing isn’t the only issue voters should consider before casting their ballots in November. Foreign policy, the general economy, immigration, and the personal qualities of both candidates are also likely to be important topics of discussion. But home prices and affordability could play a key role in close races decided in a handful of battleground states.
Recent polls show that housing affordability is a top concern for voters, but neither Democrats nor Republicans seem to have a legitimate advantage on this issue. One National survey Last month, the University of Michigan and the Financial Times found that concerns about one’s own ability to afford a home are evenly distributed across the political spectrum, with about 70% of Democrats, Republicans, and independents saying the issue is listed as the biggest concern.
“Housing remains one of the few areas where there is bipartisan agreement, and the polling results are consistent nationally at the state and local level,” said Brian Connolly, an assistant professor at the University of Michigan’s Ross School of Business. “It’s consistent with what we see.”
This suggests that housing policy may be one of the few issues that gives both major presidential candidates a chance to gain support from independent voters. Representatives for the Biden and Trump campaigns did not respond to Realtor.com’s requests for comment, but their public statements highlight their diametrically opposed positions on housing policy.
Biden’s proposals aimed at increasing housing affordability will help renters and other would-be first-time homeowners (and perhaps their parents and families looking to buy their first home) Designed to be most appealing. Meanwhile, President Trump’s message is targeted at homeowners, who are perhaps most concerned about seeing their homes continue to rise in value.
Based purely on demographics, Trump’s message could find a wide potential audience of likely voters.
The national home ownership rate is approximately 66%. According to research, homeowners are more likely to vote than renters. Apartment list. In the 2020 election, 55% of renters eligible to vote voted, compared to 71% of homeowners, the survey found.
“While there are various reasons for this disparity in political engagement, the primary reason is simply property ownership,” the study authors wrote. “Homeowners have a strong economic incentive to vote when they perceive that the policy in question could affect property values in their area.”
On the other hand, when voting, renters are significantly more likely to vote Democratic than homeowners. Biden’s proposal could be aimed at garnering turnout from renters and first-time homebuyers, a district that has historically been heavily Democratic.
The Apartment List survey found that renters preferred Mr. Biden over Mr. Trump in 2020 by a wide margin of 36.5 percentage points. Homeowners won the election over Biden by just 0.6 points, marking the first time since Bill Clinton in 1996 that a Democrat won a majority of homeowner votes.
Recent polls show that Biden is struggling with young voters, traditionally a key Democratic constituency. His focus on making homeownership more affordable may be intended to energize younger voters who are more likely to live in rental homes.
It remains to be seen whether Biden can increase turnout from renters without alienating homeowners, a difficult balance to strike for an incumbent grappling with voter dissatisfaction with the state of the housing market. It might be.
“The housing market is collapsing,” Chilton said. “There could be a variety of potential reasons for that, but it just doesn’t work for people who don’t already own it. And we got into this situation because of World War II. This is the first time in modern history since the war.
