A Key to the Election — Home Ownership
Author: Greg Valliere
July 30, 2024
IF THE DEMOCRATS WANT TO WIN the election this fall, they may need to persuade demoralized renters that they have a chance to buy a home — a sleeper issue that seemingly has no easy solution.
AN EXTENSIVE POLL yesterday from CNN showed that a stunning majority (86%) of current renters in the United States say they would like to buy a home — but can’t afford one. The poll found that 54% think it’s unlikely they’ll ever be able to own a home.
AS CNN REPORTER MATT EGAN concluded: “Given that homeownership is the ticket to wealth generation in America, that pessimism exacerbates the risk that the divide between the haves and have-nots will only grow.” Among older home seekers, the crisis is acute — just 32% of those 45 and older say they can eventually be able to afford to buy a home.
THE PESSIMISM OVER HOUSING AFFORDABILITY is similar to the dynamic in Canada, where Prime Minister Justin Trudeau’s re-election prospects have plunged, thanks in part to a housing crisis that has driven many young people westward to more affordable cities like Calgary, far away from the $1 million starter homes that are common in the suburbs of Toronto.
HOUSING IS AN ISSUE FOR POLITICIANS in the U.S. as well; President Biden has proposed legislation to offer mortgage tax credits and housing subsidies, but the bill isn’t expected to move this year.
THE RESIDENTIAL HOUSING SECTOR may benefit from somewhat lower interest rates; the Federal Reserve is likely to begin cutting rates by September. But a housing price drop is unlikely; prices have continued to rise to record levels.
WHILE THE FED HAS TO BE MINDFUL of soaring residential prices, the commercial real estate sector is in a deep slump in much of urban America, a significant drag on the softening economy — a major reason why the Fed may have to begin cutting rates by this fall.
THAT COULD PROVIDE a ray of optimism for housing, but not in time to affect the election, which will give young people an opportunity to vent.
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