WASHINGTON — 

Lori Shelton cannot comprehend ever being able to afford purchasing a house. This is a significant factor in why numerous voters are feeling negative about the economy leading up to this year’s presidential election.

Shelton, who is 67 years old, works as an Uber driver in Aurora, Colorado to assist with paying her rent. She received an early payment that went towards the security deposit for her apartment. However, this also reduced her next paycheck, leaving her with a dangerously low bank account when her rent was due. Unfortunately, this cycle never seems to break.

Shelton’s voice choked as she expressed, “I’m constantly one step behind. This is like a terrible nightmare.”

The United States has been facing a long-standing housing affordability crisis. This is due to the fact that the country did not construct enough homes to accommodate its increasing population. As a result, the shortage directly impacts the central aspect of the American dream of owning a home. Despite President Joe Biden’s claims of a strong economy, this issue highlights how former President Donald Trump, who is expected to run as the Republican nominee in 2024, largely disregarded the shortage.

According to an analysis from Harvard University, the shortage of housing has led to a surge in the number of tenants who are spending an excessive portion of their income on housing. The low supply of available homes for sale and the slow pace of new construction are contributing to high prices. Additionally, average mortgage rates have increased significantly, making it even more difficult for people to afford housing.

According to the Census Bureau, there was a small decrease in homeownership at the end of last year, despite a strong economy. If not for housing expenses, inflation (which is currently at 3.2%) would be at a manageable rate of 1.8%, which is one of President Biden’s main economic concerns.

Government officials are certain that the rise in shelter prices will subside in the near future, but the negative impact over the course of several years is evident to those who support and study the economy.

Shaun Donovan, who previously served as secretary of Housing and Urban Development during the Obama administration, has been involved in housing work for three decades. He states that the current housing affordability issue is the most severe he has encountered throughout his career. Donovan is currently the leader of the nonprofit organization Enterprise Community Partners.

Donovan observed that this issue is becoming more bipartisan and has the potential to unite political parties. The problem of costly housing was previously associated with Democratic areas like New York City and San Francisco, but it has now spread to Republican states such as Boise, Idaho, as they struggle with rising prices.

He stated that it is a prominent concern in most places, and this is leading to a shift in the political landscape that is unlike anything he has previously witnessed.

According to Mark Zandi, the chief economist at Moody’s Analytics, the result of the November election may hinge on the trajectory of 30-year mortgage rates.

The current average rate is approximately 6.74%. If it were to decrease to around 6%, there would be a higher likelihood of a Biden win. However, if the rates rose to about 8%, Zandi believes it could give Trump an advantage.

According to the speaker, if interest rates increase, it will become nearly impossible for most first-time homebuyers to afford a home, exacerbating the current housing affordability crisis. This will greatly impact voters’ perception of the economy, as owning a home is often seen as a crucial aspect of the American dream.

In his recent State of the Union speech and budget plan, Democrat President Biden addressed the hardships that many Americans are currently experiencing.

The leader of the country has the intention of financially supporting the creation and protection of 2 million housing accommodations – a considerable amount, although insufficient to completely alleviate the scarcity. Additionally, he has suggested a tax deduction of up to $10,000 for individuals looking to purchase a home. In the last three years, he has also elevated the number of households receiving rental assistance to 100,000.

During a speech to the National League of Cities on Monday, Biden emphasized the importance of continuously constructing in order to effectively lower housing expenses.

During Trump’s presidency, the issue of rapidly increasing housing prices became a growing concern. Trump rose to fame as a real estate developer, but he also faced backlash for his calls to restrict construction in the suburbs. He warned during the 2020 election that Biden’s plans to promote construction and affordability would have negative consequences for neighborhoods.

According to Freddie Mac, the mortgage company, the United States experienced a 52% increase in its housing shortage, totaling to 3.8 million units, during the years 2018 to 2020 when Trump was in office.

The Associated Press contacted Trump’s campaign for his policy plans but did not get a response. The America First Policy Institute, a think tank promoting Trump’s vision, said the key is to cut government borrowing to reduce mortgage rates. The former president has pledged to reduce deficits, but an analysis by the Committee for a Responsible Federal Budget shows that his policies in office will have likely added more than $8 trillion to the national debt.

According to the institute’s chief economist, Mike Faulkender, the most effective solution to increasing homeownership among young individuals is to lower interest rates, rather than implementing subsidies that contribute to the issue of unaffordable housing.

Reduced rates may be appealing to voters, but the majority of economists argue that they would only provide short-term financial relief. The cost of purchasing goods would likely increase as a result of increased demand due to the decrease in rates.

Building, a longer-lasting option, would require an extended period of time to accomplish and necessitate the implementation of fresh regulations by state and local governments. The government is attempting to encourage modifications to zoning laws, but the primary decisions are beyond the influence of the White House.

According to Daryl Fairweather, the chief economist at Redfin, the rise in incomes, strong economy, and decrease in inflation are not translating to an increase in home ownership. This presents a significant challenge for President Biden as it is not an issue that he can easily resolve.

The general rule of thumb is that people should pay no more than 30% of their income on rent or a mortgage. A typical household looking to buy a home would have to devote 41% of its income to mortgage payments, according to Redfin.

There are significant potential consequences for the economy as a result of this. Expensive housing can cause individuals to reduce their expenditures in other areas. Supporters claim this allows landlords to disregard the maintenance of their properties due to a constant supply of renters.

According to Zach Neumann, a lawyer in Denver who offers over $30 million in rental aid per year through the organization Community Economic Defense Project, evictions can have negative effects on the health and education of children, and also have a larger impact on society.

According to Neumann, the total expenses associated with evicting low-income tenants range from $20,000 to $30,000 per year, factoring in costs such as shelter stays and trips to the emergency room. When considering the overall figures, it becomes apparent how difficult it is for these individuals to secure housing.

Although both parties recognize the importance of increasing access to housing, a concrete plan that has received approval from both the House and Senate has yet to be put into action. Despite President Biden’s ongoing proposals for housing assistance, they have not come to fruition.

Daniel Hornung, deputy director of the White House National Economic Council, stated that if Congress had approved the investments that the president has been pushing for since the start of their administration, and had they done so three years ago, as the president suggested, we would currently have affordable units becoming available.

Unfortunately, former Federal Housing Finance Agency director Mark Calabria expressed concerns that certain government initiatives, such as the Low-Income Housing Tax Credit, may actually contribute to increased demand for housing without addressing the inadequate level of construction.

Calabria, who is currently an advisor at the libertarian Cato Institute, expressed concern about our actions leading to a higher demand rather than addressing the issue of limited supply.

Unfortunately for renters like Lori Shelton who reside in Colorado, the ongoing discussion surrounding methods for increasing housing availability offers little consolation as she struggles to pay her current rent. In the past, she has faced the possibility of being evicted and incurring penalties for late payments. While her son contributes to the rent, she has also turned to her church on occasion to help cover the hefty $2,399 monthly cost.

She stated that most of us likely do not have a savings account. If we are already spending a large amount on rent, groceries, car expenses, and bills, we may not have much left to rely on in case of emergencies.

Source: voanews.com