Published by Forbes.com | December 13, 2023
Biden has not won over voters, and one obvious culprit behind the economic pessimism is the housing market.
Unemployment is low, economic growth is strong, inflation has moderated, and income inequality has declined for the first time since 2007. However, home sales are at lows not seen since 2008, and 2023 is on pace to be the least affordable time to buy a home on record. Renters are demoralized about how unattainable homeownership has become, and homeowners feel stuck as high mortgage rates leave them unable to move. This has soured middle-class voters on Bidenomics.
The Young Middle Class Has Been Left Behind In The Housing Market And Economy
During the pandemic a once-in-a-lifetime gift was given to people who had the means and flexibility to buy a home. The Fed pumped money into the economy through low interest rates and supercharged demand for homes, especially among affluent people who seized the rare chance to lock in a rock-bottom price for a 30-year mortgage. Second home purchases doubled and luxury home sales growth quadrupled in 2020. While wealthy people and investors gobbled up homes, first-time homebuyers struggled to compete. And now that mortgage rates are near their highest point this century, many young people have been completely shut out of the market.
The obstacles keep piling up for first-time homebuyers: higher interest rates, higher home prices, fewer homes for sale and higher insurance costs. With President Biden’s limited progress on student debt reforms, many young Americans are now restarting their student debt payments and experiencing a greater struggle in their pursuit of affording a home.
If you are stuck renting, you likely feel worse about the economy than someone who has crossed the threshold into homeownership. In a recent Redfin housing-market survey, 41% of U.S. homeowners felt positive about the state of the economy, compared to only 34% of renters. Only about one in five American adults say now is a good time to buy a home, down from nearly one in three in 2022, according to a May Gallup poll. The readings in 2022 and 2023 are the only times over the past 45 years when the majority of Americans thought it wasn’t a good time to buy a home.
