The 2024 US presidential election is set to be heavily influenced by the ongoing housing crisis gripping the nation. With Americans facing increasing affordability challenges, both major political parties are scrambling to present solutions that address the concerns of a worried electorate.
Realtor Mike McCann, a seasoned veteran of the Philadelphia real estate market, paints a stark picture of the current situation. “Sales are down dramatically from a couple years ago,” he told The Financial Times. “The crazy thing is that in any other downturn in my 38 years, prices start to drop, drop, drop – but inventory is low. People have frozen, they’re saying, ‘I’m not selling my house because I have a 2.6 percent mortgage rate.’” This reluctance to sell, coupled with high mortgage rates, has created a perfect storm that has driven housing-related expenses to account for nearly 90% of the inflation recorded in July.
While the Federal Reserve is expected to start cutting interest rates in September, offering some potential relief for new buyers, experts caution that the effects may be slow, making the housing crisis a pivotal issue as the election approaches.
The cost of living has become a top concern for Americans, presenting a significant challenge for candidates vying for the support of wavering voters. Vice President Kamala Harris has unveiled a series of proposals aimed at tackling housing affordability. One key initiative is a credit of up to $25,000 for first-time homebuyers. “We should be doing everything to make it more affordable to buy a home, not less,” Harris stated during a speech in Raleigh, North Carolina.
Harris has also advocated for the construction of three million new housing units, both for sale and rental, over the next four years. Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, highlighted the stark reality of a stagnant housing supply, noting that far fewer new single-family homes and multifamily rental buildings have been built since the foreclosure crisis between 2007 and 2010. Many experts agree that increasing housing supply is a crucial step towards resolving affordability issues.
Beyond expanding supply, Harris’s proposed solutions include tax breaks for homebuilders to incentivize increased construction and measures to crack down on unfair practices by corporate landlords.
Former President Donald Trump has adopted a different approach to addressing the housing crisis. He argues that crackdowns on both legal and unauthorized immigrants are necessary to free up housing for US citizens. He has also emphasized the role of energy costs in housing affordability, proposing to increase the supply of energy resources through a renewed focus on domestic drilling.
Beyond these specific policies, Trump’s Republican platform includes pledges to allow home construction on federal lands and offer tax relief for first-time homebuyers.
The housing crisis continues to be a major source of stress for many Americans. Rising rents and new home prices make it increasingly challenging for average families to make ends meet. According to the National Association of Home Builders, a staggering 75% of US households are unable to afford a median-priced new home.
Given the complexity of the housing crisis and its significant impact on inflation, voters must carefully consider the long-term implications of the proposed solutions. Consulting a financial advisor can provide personalized advice tailored to individual circumstances, aiding in navigating this challenging economic landscape.
