Housing affordability is the top concern for younger Americans as they head to the polls for the Nov. 5 presidential election, according to a recent Redfin survey.
Roughly 91% of Gen Zers ranked housing affordability as an essential factor in their vote above other issues, including the economy, abortion and gun rights, preserving democracy, and foreign wars, the survey said. Millennials, Gen Xers, and baby boomers considered the economy the most critical factor in their presidential pick. Gen Xers and baby boomers also ranked preserving democracy above housing affordability.
Still, at least 80% of every generation said housing affordability is essential to their vote. The U.S. housing market has stalled as homebuyers are dealing with mortgage rates that have hovered near 7% for the 30-year loan, while home prices have risen more than 40% since before the pandemic homebuying frenzy. The median U.S. home-sale price hit an all-time high of $394,000 during the four weeks ending June 9, up 4.4% year over year–the most significant increase in about three months, according to Redfin.
“Housing affordability is a cornerstone of this year’s presidential election because even though the economy is fairly strong, unemployment is low and wages are rising, buying a home feels impossible for many Americans,” said Redfin Senior Economist Elijah de la Campa. “This is particularly the case for young people, who have seen the cost of starter homes increase twice as fast as incomes.
“Young people care about other political issues, like immigration and abortion rights, but they’re more likely to cite housing affordability as a factor in their vote because it directly impacts the roof over their head, their lifestyle and their ability to build wealth,” de la Campa continued.
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BIDEN WANTS TO GIVE HOMEBUYERS $400 PER MONTH: STATE OF THE UNION
Both candidates plan to address housing
President Joe Biden has called on Congress to invest more than $175 billion in affordable housing initiatives, according to a White House statement.
The Biden administration has proposed using some funds to build and maintain millions of affordable homes for rent and ownership, such as accessory dwelling units and manufactured housing, and to incentivize state and local governments to reduce barriers to affordable housing development.
The administration has also proposed a new Neighborhood Homes Tax Credit. The proposed federal initiative would enable better affordability for homebuyers by injecting $16 billion to add more housing stock to the market and $10.1 billion for down payment assistance. The tax credit would be provided on the condition that low- or middle-income homeowners occupy the home.
Biden has also called on Congress to create legislation giving a $10,000 tax credit to first-time homebuyers and those who sell their starter homes. The credit would be spread over two years and credited as $400 monthly payments.
The tax credit would be equivalent to reducing the median home’s mortgage rate by 1.5 percentage points over two years. Over the next two years, it could help more than 3.5 million middle-class families purchase their first home. Expanding the credit to those who buy their second home could also improve the housing supply for those in the starter home market.
A second term for former President Donald Trump could renew the push for a federal government reform and reorganization plan. One plan would involve privatizing Fannie Mae and Freddie Mac to promote competition in the housing finance market and create a system that encourages sustainable homeownership.
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HOMEBUYERS GAINED THOUSANDS OF DOLLARS AS MORTGAGE INTEREST RATES FALL: REDFIN
Home insurance costs are another obstacle for homebuyers
Most Americans still dream of homeownership, but 71% said they are waiting on rate cuts before entering the market, according to a recent BMO Financial survey.
Americans will likely have to hold out through another summer for potential relief. Since July, the Federal Reserve has maintained the federal funds rate range at 5.25% to 5.5%. Fed officials have said they anticipate just one rate cut for 2024 but need more confidence that inflation is heading toward the 2% target rate before they make the move.
High mortgage rates are not the only thing delaying the dream of owning a home; 43% of respondents said that rising home insurance costs may impact their ability to keep or buy a home. Gen Z feels most affected by these costs (60%), followed by millennials (55%).
Homeowner insurance premiums have increased by 55% in the last four years as losses build and insurers struggle to recoup costs, according to a recent Guaranteed Rate Insurance report. In 2023 alone, insurance rates jumped 19%.
“One of the most evident market trends in 2023, which will continue into 2024, is continued volatility, particularly as it relates to the presence of top in-state carriers and the availability of insurance,” the Guaranteed Rate report said. “In some areas, top carriers are no longer offering new policies. These exits, however, have not caused ‘vacuums’ as there is evidence of new carriers, especially surplus lines, in select states entering the market due to the ability to offer policies at higher premiums.”
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HIGH HOMEOWNERS INSURANCE RATES SCARING AWAY FLORIDA HOMEBUYERS, OTHER STATES FACE THE SAME ISSUE
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