Why housing prices may pose a problem for Biden

WASHINGTON — Cameron Ambrosy spent the first weekend of December going to 10 open houses — purely for research purposes. The 25-year-old in St. Paul, Minn., has a well-paying job, and she and her husband are saving diligently, but she knows it will be years before they can afford to buy.

“It is much more of a longterm goal than for my parents or my grandparents, or even my peers who are slightly older,” said Ambrosy. “There’s a lot of nihilism around long-term goals like homebuying.”

As many people pay more for rent and some struggle to save for starter homes, political and economic analysts are warning that housing affordability may be adding to economic unhappiness — and is likely to be a more salient issue in the 2024 presidential election than in years past.

Many Americans view the economy negatively, even though unemployment is low and wage growth has been strong. Younger voters cite housing as a particular source of concern: Among respondents ages 18 to 34 in a recent Morning Consult survey, it placed second only to inflation overall.

Wary of the issue and its political implications, President Joe Biden has directed his economic aides to come up with new and expanded efforts for the federal government to help Americans who are struggling with the costs of buying or renting a home, aides say. The administration is using federal grants to prod local authorities to loosen zoning regulations, for instance, and is considering executive actions that focus on affordability. The White House has also dispatched top officials, including Lael Brainard, who leads the National Economic Council, to give speeches about the administration’s efforts to help people afford homes.

“The president is very focused on the affordability of housing because it is the single most important monthly expense for so many families,” Brainard said.

Housing has not traditionally been a big factor motivating voters, in part because key market drivers like zoning policies tend to be local. But some political strategists and economists say the rapid run-up in prices since the pandemic could change that.

Rents have climbed about 22% since late 2019, and a key index of home prices is up by an even heftier 46%. Mortgages now hover around 7%, as the Federal Reserve has raised rates to the highest level in 22 years in a bid to contain inflation. Those factors have combined to make both monthly rent and the dream of first-time homeownership increasingly unattainable for many young families.

“This is the singular economic issue of our time, and they need to figure out how to talk about that with voters in a way that resonates,” said Tara Raghuveer, director of KC Tenants, a tenant union in Kansas City, Mo., referring to the White House.

The housing affordability crush comes at a time when many consumers are facing higher prices in general. A bout of rapid inflation that started in 2021 has left households paying more for everyday necessities like milk, bread, gas and many services. Even though costs are no longer increasing so quickly, those higher prices continue to weigh on consumer sentiment, eroding Biden’s approval ratings.

While incomes have recently kept up with price increases, that inflationary period has left many young households devoting a bigger chunk of their budgets to rental costs. That is making it more difficult for many to save toward now-heftier down payments. The situation has spurred a bout of viral social media content about the difficulty of buying a home, which has long been a steppingstone into the middle class and a key component of wealth-building in the United States.

That’s why some analysts think that housing concerns could morph into an important political issue, particularly for hard-hit demographics like younger people. While about twothirds of American adults overall are homeowners, that share drops to less than 40% for those younger than 35.

America has a housing supply shortfall that has been years in the making. Builders pulled back on construction after the 2007 housing market meltdown, and years of insufficient building have left too few properties on the market to meet recent strong demand. The shortage has recently been exacerbated as higher interest rates deter home-owning families who locked in low mortgage rates from moving.

Conditions could ease slightly in 2024. The Federal Reserve is expected to begin cutting borrowing costs next year as inflation eases, which could help to make mortgages slightly cheaper. A new supply of apartments are expected to be finished, which could keep a lid on rents.

And even voters who feel bad about housing might still support Democrats for other reasons. Ambrosy, the would-be buyer in St. Paul, said that she had voted for Biden in 2020 and she planned to vote for the Democratic nominee in this election purely on the basis of social issues, for instance.

But housing affordability is enough of a pain point for young voters and renters — who tend to lean heavily Democrat — that it has left the Biden administration scrambling to emphasize possible solutions.

After including emergency rental assistance in his 2021 economic stimulus bill, Biden has devoted less attention to housing than to other inflation-related issues, like reducing the cost of prescription drugs. His most aggressive housing proposals, like an expansion of federal housing vouchers, were dropped from last year’s Inflation Reduction Act.

Still, his administration has pushed several efforts to liberalize local housing laws and expand affordable housing. It released a “Housing Supply Action” plan that aims to step up the pace of development by using federal grants and other funds to encourage state and local governments to liberalize their zoning and land use rules to make housing faster and easier to build. The plan also gives governments more leeway to use transportation and infrastructure funds to more directly produce housing (such as with a new program that supports the conversion of offices to apartments).

The administration has also floated a number of ideas to help renters, such as a blueprint for future renters’ legislation and a new Federal Trade Commission proposal to prohibit “junk fees” for things like roommates, applications and utilities that hide the true cost of rent.