In most presidential election years, housing prices are not typically at the forefront of voter concerns. However, the 2024 election is shaping up to be different. With mortgage rates rising and housing prices continually climbing, many first-time homebuyers find it increasingly difficult to achieve homeownership. As the campaign season heats up, the housing affordability crisis is becoming a focal point of voter discussions.
In March, President Joe Biden proposed a $10,000 tax credit for first-time homebuyers during a speech in Nevada, aiming to ease the financial burden and provide more economic support to new homeowners. Meanwhile, former President Donald Trump countered in a campaign video, accusing Biden of undermining suburban property values by expanding affordable housing options.
The election will also be closely contested in six key swing states: Arizona, Georgia, Michigan, North Carolina, Pennsylvania, and Wisconsin. In 2016, Trump won all these states except Nevada, while Biden won all but North Carolina in 2020. Both candidates need to secure at least three of these states to ensure victory.
The issue of housing affordability is particularly severe. Nationally, the median home price has risen by 28% since January 2021, with the price-to-income ratio reaching an all-time high of nearly 6:1, compared to 4.1:1 in 2019. Additionally, U.S. Census Bureau data indicates that nearly half of renters spend over 30% of their monthly income on rent, with a quarter spending more than 50%. High rents make it difficult for many renters to save for a down payment.
Danielle Hale, Chief Economist at Realtor.com®, noted, "Owning a home has long been a key part of the American Dream. If people feel this is becoming unattainable, we'll see their attitudes reflected in the election." She added that it’s not surprising voters turn to politics for solutions when the market fails to meet their needs.
realtor.com
In his State of the Union address, Biden proposed several measures to lower housing costs, including a $5,000 annual tax credit for first-time homebuyers and a $10,000 similar credit each year for two years. He stated, "I know the cost of housing is important to you. If inflation continues to decrease, mortgage rates will also come down."
However, Biden's tax credit proposal has faced criticism from some economists who warn it could drive up housing demand and prices. Nicholas Irwin, an associate professor at the University of Nevada, Las Vegas, commented, "Subsidizing demand won't solve the issue of high housing costs. We need to build more houses to meet people's needs."
Republican candidate Trump has argued that Democratic measures to improve housing affordability amount to a "war on the suburbs." In a recent campaign video, he claimed, "The woke left is waging an all-out war on the suburbs, and their Marxist crusade is destroying your property values."
These statements echo Trump's stance during his presidency, when he limited suburban development. During that period, the U.S. housing shortage rate surged by 52%, creating a gap of 3.8 million homes.
From a demographic perspective, Trump's message could attract more voters. Nationally, the homeownership rate is around 66%, and homeowners are more likely to vote than renters. In the 2020 election, 71% of eligible homeowners voted, compared to 55% of renters.
On the other hand, renters tend to favor the Democratic Party. Biden's proposals might be aimed at mobilizing renters to vote, a constituency that historically supports Democrats. In 2020, renters favored Biden over Trump by 36.5 percentage points.
Whether Biden can increase renter turnout without alienating homeowners remains to be seen. Balancing the needs of these two groups will be a significant challenge for the incumbent president as he addresses voter dissatisfaction with the current housing market.
