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Welcome to the Deerwood Realty YouTube channel. I'm John Schink, founder and managing broker of Deerwood Realty in St. Louis, Missouri.
It seems the presidential candidates have ventured into the housing world, and I don't think that's a great idea. But let's go over it. I found an interesting article on Realtor.com that I thought we could discuss. The article mentions that ahead of the 2024 presidential election, home prices and housing affordability are emerging as key issues in swing states that will decide the election.
Now, I would say that housing affordability affects every state, not just the swing states. According to an analysis of Realtor.com affordability score data, there are distinct trends separating red states, blue states, and the seven key swing states: Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. On average, red states are more affordable than the US as a whole, while blue states are less affordable. The swing states sit in the middle, slightly more affordable than the national average. These trends have persisted even as affordability declined across the board.
The article states that President Joe Biden, a Democrat, addressed the housing crisis in his State of the Union this spring, proposing tax credits for some buyers and sellers, and measures to boost construction. His Republican opponent, Donald Trump, took an opposite stance, accusing Biden of waging an attack on the suburban lifestyle that would reduce home values. It's an interesting characterization.
The affordability data shows that the two candidates are essentially speaking to different groups of voters. However, in November, what will matter most is how they are received by voters in the toss-up states that will decide the election. I don't believe people are single-issue voters, especially not on housing affordability. In real estate, we like to think it's a significant issue, but I don't see it being the number one issue for most voters.
According to the article, in March, the national average affordability score was 0.65. Iowa had the highest state score at 0.93, but no state scored above one, indicating that home affordability is a challenge nationwide. It's important to note that the Realtor.com affordability index reflects only home prices and not rents. Rent affordability is also a challenge, with nearly half of all renters spending more than 30% of their income, and a quarter spending more than 50% on rent each month.
The issue of affordability, however, is intertwined with inflation, which has been a problem since the Trump presidency and has continued into Biden's term. If you can't afford to rent, you likely can't afford to buy either. Census data shows that on average, states that vote Republican tend to be more rural, which could be one factor mitigating the housing crisis in those states. However, just because something is more affordable doesn't mean it's affordable.
The article quotes an associate professor of public administration at Tennessee State University, suggesting that differences in home affordability in red and blue states could boil down to geography. Major cities tend to have higher home prices. For example, Austin experienced significant growth and now faces affordability issues.
Rust Belt swing states have lower than average population growth and higher home affordability scores than the national average, though still down from 2021 levels. Michigan saw a population decline of 4% from April 2020 to mid-2023, and had the highest affordability score of the swing states at 0.89. Pennsylvania was not far behind at 0.84.
In states with explosive population growth like Nevada and Arizona, affordability scores were much lower, putting them among the top 10 least affordable states. Voters rate housing affordability as a top concern, but it's unclear which party stands to benefit. A national survey from the University of Michigan and the Financial Times found that concern over one's own ability to afford housing was evenly distributed politically.
Biden has made housing affordability a key issue of his reelection campaign, proposing a $10,000 tax credit for first-time home buyers and those selling their starter homes. These proposals would have to pass a divided Congress. Meanwhile, Trump has tailored his message to existing homeowners, arguing that Biden's proposals would erode home values.
Biden's message might resonate more in states already likely to vote for him. However, I don't think anyone should trust the government to solve these issues. The idea that the government will ensure housing affordability for all is unrealistic.
How does the struggle for housing affordability reflect broader socioeconomic inequalities in the United States? It's related to inflation and economic policies. Housing has always been expensive, but now it's more so due to inflation.
The political debate around housing affordability might influence public trust in the government, but I don't think anyone should trust the government blindly. Housing affordability should not be seen as a fundamental right. The best policy would be to end artificial manipulation of currency by the Fed.
Prioritizing housing affordability in election campaigns raises ethical considerations. Politicians often promise more than they can deliver. Housing policies can affect community cohesion and social stability, but these issues are not limited to swing states. Multi-generational housing is often a symptom of unaffordability rather than a positive trend.
The government should intervene minimally in the housing market. Political candidates should balance the interests of homeowners and renters. Corporate influence plays a role in shaping housing policies, but it may not always come from the real estate sector.
Cultural attitudes towards homeownership differ across political and geographical lines, but ultimately, everyone wants to afford a place to live. The influence of institutional investors has exacerbated the housing affordability crisis.
With that, I'll wrap up. Thank you for watching and listening. I'll catch you on the next one.