A rematch between President Joe Biden and former President Donald Trump is all but guaranteed following their dominant performances on Super Tuesday and the incumbent’s fiery State of the Union address. And, of course, economic concerns are almost always top of mind for voters in an election year. That hasn’t changed, but the economy is increasingly a single-issue issue. James Carville, strategist for President Bill Clinton’s victorious 1992 campaign, explained why his underdog candidate overthrew 12 years of Republican dominance: “It’s the economy, stupid.” Well, it looks like the 2024 election is the real estate market, stupid.
More than half of homeowners and renters say housing affordability is influencing who they plan to vote in the upcoming presidential election, according to a Redfin-commissioned survey of about 3,000 people conducted last month. When asked to indicate the extent to which they agreed or disagreed with the following statement: Housing affordability is affecting who is likely to vote in the next presidential election, 17.9% said they strongly agreed. and 35.3% said they somewhat agreed. Americans’ widespread discontent with the economy has baffled economists with so much evidence that it is doing well on paper: a “vibecession” rather than a recession. But people’s discontent and President Biden’s low approval ratings make sense when you consider that people are locked in their homes or completely excluded from the market.
Nearly two-thirds of homeowners and renters say housing affordability makes them feel negative about the economy; 22.7% of respondents say they strongly agree with the statement: Housing affordability makes me feel negative about the economy in general, and 41.5% say they somewhat agree.
“Housing affordability is a priority for voters because high mortgage rates and home prices, along with an acute housing shortage, have put the dream of homeownership out of reach for many Americans,” said Redfin chief economist Daryl Fairweather. “Although the economy is strong on paper, many families do not feel the benefits because they have difficulty affording the home they want or already live in. As a result, many feel stuck, unable to make desired moves and life improvements.”
Just consider the last few years. The pandemic-fueled housing boom drove up home prices and rents substantially, and soon after inflation hit a four-decade high. In response, the Federal Reserve raised interest rates and mortgage rates soared. The average 30-year fixed mortgage rate hit 8% last year, a far cry from the historic lows hit by the pandemic. And home prices haven’t actually fallen because there’s so little supply. But the economy has supposedly recovered, or simply remained resilient; Inflation has fallen and interest rate cuts appear to be on the horizon for this year. While all that is true, the home does not appear recovered, even if there are signs of healing. Aside from those who feel trapped in their current homes with lower mortgage rates, there are others who are simply completely priced out and feel like they will be renters forever.
“Those who own homes right now have seen their wealth increase because the prices of their homes, and just their assets, have gone up, and they have a fixed payment,” Zonda chief economist Ali Wolf previously said. Fortune. Although “moving from renting to owning seems almost impossible,” Wolf said, “not only because supply is tight, but also because affordability is so bad right now.”
Peak home price appreciation may be behind us, but home prices remain high and mortgage rates are higher than younger generations are accustomed to; Prospective homebuyers need to earn almost $50,000 more than before the pandemic to afford a home. Not to mention, by one estimate, we are short between two and seven million homes, something that will exist beyond the short-term challenges prevalent in the current housing market.
So which presidential candidate will solve, or at least try to solve, the problem? James B. Lockhart III, a senior fellow at the Bipartisan Policy Center who played a critical role as a regulator during the 2008 global financial meltdown, previously said Fortune that Biden and Trump have been in office and haven’t done much for housing.
Last week, President Biden announced a plan to lower the cost of housing through tax credits (for first-time homebuyers and people selling their first homes), down payment assistance, and more. But a senior official in his administration said Fortune that the key to making housing affordable is to build more housing, which Biden’s plan mentions, without really detailing how he plans to do it other than allocating funds.
“To be able to afford housing, we need more housing overall,” said Adewale Adeyemo, deputy secretary of the Treasury. Fortune after President Biden’s State of the Union address. “We have a supply challenge in the economy,” Adeyemo explained. “Since the financial crisis, we have built very little housing here in the United States.”
Adeyemo is not the only senior official who knows exactly how bad the real estate crisis is. Federal Reserve Chairman Jerome Powell attested to this recently, telling Congress that “the housing market is in a very difficult situation right now.” Agreeing almost exactly with Adeyemo’s diagnosis, Powell explained that even once the problems associated with high mortgage rates subside as interest rates normalize, “we will still be left with a nationwide housing market where there is a shortage of households”.
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