[ad_1]
WASHINGTON (AP) — Lori Shelton doesn’t think she’ll ever have the money to buy a house — and it’s the main reason so many voters are depressed about the economy ahead of this year’s presidential election. .
Shelton, 67, drives Uber to help pay rent in Aurora, Colorado. The deposit for her apartment was covered by an advance from her salary. But it also cut into her next paycheck, leaving her bank account dangerously low when her rent was due. This cycle never seems to end.
“I’m always one step behind,” Shelton said, his voice breaking. “It’s a nightmare, a horrible nightmare right now.”
The United States is easily weathering a decades-long housing affordability crisis. The root of the problem is that America has failed to build enough housing for its growing population. The housing shortage strikes at the heart of the American dream of homeownership, weakening President Joe Biden’s confidence that the U.S. economy is strong and undermining former president and 2024 Republican nominee Donald Trump. This highlights how Japan has largely overlooked the housing shortage.
A Harvard University analysis shows that a record number of renters are spending excess income on housing because of the housing shortage. There aren’t enough homes being sold or built, and prices remain high. Average mortgage rates have more than doubled, making mortgage affordability even worse.
read more: Wall Street sees a solid 2024 for home builders, but mortgage rates remain a wild card
In fact, the Census Bureau reported that homeownership rates declined slightly late last year in an otherwise strong economy. Without the shelter-in-place costs, inflation, Mr. Biden’s most prominent economic issue, would have remained at a healthy and stable 1.8%. Rather, it has been hovering around 3.2%.
Administration officials are confident that shelter inflation will subside soon, but years of damage are clear to advocates and economists.
“I’ve been working in housing for 30 years, and the housing affordability challenge is the worst I’ve ever seen in my career,” said former Secretary of Housing and Urban Development during the Obama administration. said Sean Donovan, who now heads the nonprofit organization. Enterprise Community Partners.
Donovan noted that this is increasingly a bipartisan issue and could bring together political parties. Expensive housing was once the preserve of Democratic areas like New York City and San Francisco. It is now moving into Republican states as areas such as Boise, Idaho, face rising prices.
“This is a first-tier problem almost everywhere,” he says. “And it’s changing the domestic politics around it in a way that’s quite different from anything I’ve seen before.”
Mark Zandi, chief economist at Moody’s Analytics, said the outcome of November’s election could ultimately depend on developments in 30-year mortgage rates.
read more: Momentum builds for major homelessness case before U.S. Supreme Court
Current interest rates average around 6.74%. If the percentage drops to near 6%, Biden’s chances of victory will increase. But Zandi said a Trump victory could be possible if interest rates stay around 8%.
“Given the current house price crisis, rising interest rates will put home ownership completely out of reach for almost all potential first-time homebuyers,” he said. Ta. “Homeownership is an important part of the American Dream, so when it appears unattainable, it has a huge impact on voters’ economic views.”
Democrat Biden acknowledged the pain many people are feeling in his State of the Union address earlier this month and in his budget proposal released Monday.
The president wants to fund the construction and preservation of 2 million homes, a meaningful amount but not enough to solve the shortfall. He also proposed tax credits worth up to $10,000 for homebuyers. He has expanded rent subsidies to 100,000 households over the past three years.
“The bottom line is we have to build, build, build,” Biden said Monday in a speech to the National League of Cities. “That way we can lower housing costs forever.”
Rapidly rising home prices were also a serious issue under Trump, who became the first real estate developer to achieve celebrity status. President Trump called for restrictions on construction in the suburbs during his presidency. During the 2020 campaign, he argued that Biden’s policies to promote construction and affordability would “destroy neighborhoods.”
Between 2018 and 2020, during Trump’s tenure, the nation’s housing shortage jumped 52% to 3.8 million units, according to mortgage company Freddie Mac.
clock: Survey reveals that half of American renters pay more than 30% of their income on housing costs
The Associated Press contacted the Trump campaign about its policy plans but did not receive a response. The America First Policy Institute, a think tank promoting President Trump’s vision, said cutting government borrowing is key to lowering mortgage rates. Although the former president has promised to reduce the deficit, his policies during his presidency will likely increase the national debt by more than $8 trillion, according to an analysis by the Committee for a Responsible Federal Budget.
“The best way to improve access to homeownership for young people is to reduce interest rates, not provide subsidies that exacerbate housing affordability,” said Mike Faulkender, the institute’s chief economist. It’s about lowering it.”
While lower interest rates may work in voters’ favor, most economists believe they will provide temporary fiscal relief at best. The purchase price is likely to be revised upward in response to increased demand due to lower interest rates.
A more permanent solution, construction, would take years to accomplish and would require new rules from states and cities. Although the administration is trying to encourage zoning changes, key choices are outside of the White House’s control.
“Even though incomes are rising, the economy is strong and inflation is falling, people can’t afford to buy a home,” said Darryl Fairweather, chief economist at brokerage Redfin. “That seems to be the biggest problem for Biden because it’s not a problem he can solve.”
A general rule of thumb is that people should not spend more than 30% of their income on rent or mortgages. According to Redfin, the typical household looking to buy a home must allocate 41% of their income toward mortgage payments.
Therefore, a wide range of economic risks exist. Rising housing costs may cause people to cut back on spending elsewhere. Supporters argue that landlords can ignore their properties because there are always tenants.
clock: Lawsuit against real estate commission could shake up housing market
Zach Newman, a Denver-based attorney who provides more than $30 million a year in rental assistance through his nonprofit Community Economic Defense Project, says evictions worsen children’s health and educational outcomes and harm society. He said this could impose an even greater burden on the government.
The cumulative cost of evicting poor tenants is “$20,000 to $30,000 a year, including shelter nights and emergency room visits,” Newman said. “It’s really overwhelming when you think about the total number and these people are fighting to keep a roof over their heads.”
While there is bipartisan agreement on the need for more housing, no significant plan has yet passed the House or Senate. Biden has proposed housing subsidies throughout his administration, but none have materialized.
Daniel Hornung said, “If Congress had passed some of the investments that the president has been calling for since he took office, and if they had done it three years ago, as the president has claimed, they would be affordable right now.” Price units would have been put online.” Deputy Director of the White House National Economic Council.
But Mark Calabria, who headed the Federal Housing Finance Agency during the Trump administration, said many federal tools to increase housing, such as the low-income housing tax credit, would further boost demand without sufficiently increasing construction. He said it was possible.
“What worries me is that we’ve done things that increase demand when the problem is supply,” said Calabria, now an adviser to the liberal Cato Institute. Told.
But for renters like Lori Shelton of Colorado, who is currently paying rent, the debate over how to add to the supply of housing is a total letdown. She has faced threats of eviction and late fees before. She receives some of her rent from her son, but she also relies on her church to help cover the $2,399 she receives each month.
“I don’t think the majority of us have a savings account like that,” she says. “If you’re spending that much money on rent, groceries, cars, and bills, there’s not much you can get back.”
[ad_2]
Source link
