AMAC Exclusive – By Andrew Shirley
Despite President Joe Biden’s proclamation that “Bidenomics is just another way of saying “the American Dream,” the numbers show that one critical part of that dream for millions of families – owning a home – is now more out of reach than at any time in history.
According to a report released earlier this year from real estate and property research firm ATTOM, “median-priced single-family homes and condos are less affordable in the third quarter of 2023 compared to historical averages in 99 percent of counties around the nation with enough data to analyze.” On average according to ATTOM’s data, new homeowners are now required to spend about 35 percent of their monthly income on a mortgage and other expenses related to owning a home – a number considered unaffordable by accepted lending standards, which call for that figure to be closer to 28 percent.
These increases are due in large part to a dramatic spike in interest rates under Joe Biden as a result of several trillion-dollar spending packages that have sent inflation soaring. For the week beginning December 4, the average rate on a 30-year fixed mortgage was 7.66 percent – more than 2.5 times the 2.77 percent interest rates when Biden took office.
In hard numbers, that means a family looking to buy a $400,000 single-family home (which is virtually impossible to find in many areas) can expect to pay about $1,000 more per month on their mortgage than just two years ago. From September of last year to September of this year alone, the median mortgage payment required for a single-family home increased by more than 50 percent nationwide.
In addition to interest rates reaching historic highs, housing prices have also shot up since Biden took office. In the second quarter of 2023, the median home price in the United States was $416,000 – a more than 25 percent increase from the end of 2020.
While people looking to become first-time homebuyers have been especially impacted by these soaring costs, Americans looking to buy another home have also found themselves in a tough spot. Families who have had more children and are looking for extra bedrooms or want to care for an ailing parent simply can’t afford to trade the three percent interest rates they locked in when Trump was in office for the 7.5+ percent rates available today.
The Biden administration and their allies in the media have been quick to blame rising housing costs on lingering supply chain issues and a supply crunch brought on by the COVID-19 pandemic. But Biden has also reversed many of former President Donald Trump’s regulatory reforms which led building costs to decrease, along with implementing new regulations forcing costs higher still.
Earlier this year, for instance, Biden’s Department of Energy released new “green” building codes that experts say will force builders to spend significantly more to comply with. Since January of 2021, overall construction costs for both residential and commercial buildings have increased by 29 percent.
The net result of all of these developments is that fewer Americans can afford a home at all, and those that can are having to make greater sacrifices to achieve their homeownership dreams.
One trend that has become particularly popular especially among young people is known as “househacking,” where homeowners rent out a portion of their home to afford payments. According to a new report from real estate marketing giant Zillow, more than half of Millennial and Gen-Z buyers “view the opportunity to rent out a portion of their home for rental income as ‘very’ or ‘extremely’ important” when purchasing a home.
While househacking is a creative way to make ends meet, it could also have other negative downstream effects. For example, it’s easy to see why young people who need to rent out part of their home would be less inclined to get married and start a family.
For prospective homebuyers, there aren’t many promising signs that relief is coming anytime soon, either. Redfin CEO Glenn Kelman warned in an interview on Fox Business that it seems “very unlikely” that interest rates will ease by the end of 2023.
As Kelman highlighted, the real danger may be that “so many people have stopped believing in the American dream.”
“One in five Millennials believe they will never own a home,” Kelman continued. “And if you don’t have that conviction that you’re going to get your piece, it’s really hard to invest in the long term. It’s really hard to believe that society is going to work out for you.”
This may be the true tragedy of the White House’s “Bidenomics” farce – not just that it’s making housing (and everything else) more unaffordable for the American people, but that it’s destroying the hope of millions that they will have an opportunity to achieve the American Dream at all.
Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.
