STICKER SHOCK — By nearly every metric, it’s never been more expensive to buy a home in America. The average sale price for a home in 2024 is a record high $513,100 , the average 30-year fixed rate mortgage is near 7 percent and the ratio of the median single-family home sale price to household income — a good proxy for tracking nationwide home affordability — is 7.68 to 1 , an all-time record. Naturally, housing concerns loom large in the race for the White House: An April Michigan Ross/Financial Times poll showed that 27 percent of Americans assess housing costs as one of their top three economic issues as they make their vote for president, ranking higher than government spending, the national debt, wages or even interest rates. Younger voters are especially energized around housing issues, the poll showed, with 31 percent of all voters 18-44 marking it as a top economic issue, tied with gas prices and wages. Yet so far, neither national Republicans nor Democrats have made housing central to their political platform — even while their state-level counterparts on both sides of the aisle pursue policies to alleviate the situation. And while some typical economic indicators point to a strong economy, housing costs spiking across the country paint a different picture — that of a country in which freedom is curtailed by a lack of housing. “This is the most challenging home buying market we’ve ever seen, in terms of affordability, interest rates and the lack of inventory of homes we have across the country,” said Alexander Hermann, a senior research associate for the Joint Center for Housing Studies at Harvard University who has built a model to geographically track where and when housing price to income ratios have spiked most. “It can really limit people’s choices,” he added. “Not just your ability to move, but also if you can move, where.” For decades homeownership has been a point of pride, a key step on the path to the American Dream and a goal within reach for the average American. According to research on median home sale price to median household income ratios done by Hermann, most metros across the country had sale price to income ratios under three to one throughout the 1970s and 1980s, a golden period for American homeownership. But recent years have created a completely different picture, as home prices ballooned across the country in the wake of the pandemic and incomes struggled to keep up. On top of that, rising interest rates — which price-to-income ratios don’t take into account — have made buying a home even more difficult for most Americans. Today, the national sale price to median household income ratio is closer to eight to one, and some metro areas on the West Coast sport a ratio that’s over 10 to one. While Hermann said that increasing interest rates had leveled off home prices somewhat, bringing the home price to income ratio down in recent years, overall home affordability has fallen remarkably in recent decades — and the increases aren’t located just in the urban coastal areas where much of the news coverage of the housing crisis has focused. During the pandemic, rural areas actually saw some of the greatest increases in housing prices as remote workers flocked to more space, especially in the Mountain West . That means Americans can’t necessarily count on a move away from metro areas to find cheaper housing. At the state-level at least, elected officials and policymakers in both parties are trying to address the housing crisis. Both Republican Gov. Greg Gianforte in Montana and Democratic Gov. Gavin Newsom in California have gotten behind remarkably similar housing platforms — mostly easing restrictions on housing supply by changing zoning controls or allowing for the construction of accessory dwelling units, or ADUs, on properties. And while housing issues have typically been understood as the purview of local and state governments, where most zoning authority is located, Brian Connolly, an assistant professor of business law at the University of Michigan, said there is much more the federal government could do to incentivize states to increase supply — if national politicians wanted to take up the issue. Connolly said that if he were advising President Joe Biden or Donald Trump on creating a national federal housing policy, he’d propose a “Housing New Deal” with a focus on increasing supply. That would mean providing grant money to local governments to ease regulatory and zoning barriers to new construction, expanding existing housing voucher programs and increasing tax credits to developers to incentivize the construction of more affordable housing. (Private housing starts — that is, when excavation begins for a new unit of housing — have stayed flat when compared to the 1960s , even though the population of the U.S. has nearly doubled in the same time period.) Connolly said that the rapid price increases, nationwide scope of the challenge and early attempts at policy fixes by the states is a sign the issue is ripe to bring to the national stage. “I think there might be a little bit of discomfort with the federal government taking a bigger role in housing,” he said. “But it does seem like there is space for one of the major parties to take on housing as an issue to focus on.” Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight’s author at pederschaeferwriting@gmail.com .
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