Data on the intersection between housing issues and politics is clear: in 2024, housing is an issue that resonates strongly with younger voters, but high mortgage rates and high home prices may be issues for years to come. This is according to a report published this week by Politico.
Recent data about attributes of the housing market — including existing home and pending sales, mortgage rates and home prices — have not painted a rosy picture of the housing market for new entrants. Subject matter experts are taking notice.
“Home sales activity is at a 30-year low — it’s essentially stuck at that level, so all of the economic activity associated with home sales is at a depressed level,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR) to the outlet.
Pricing appears to be most on the mind of younger voters in particular, according to a survey conducted by Redfin chief economist Daryl Fairweather. But federal government initiatives have not made much headway on this issue in particular, since policies at the local, county and state levels are often bigger determinants of pricing changes than federal policies.
“It’s unprecedented, it’s never been such an issue,” Fairweather told Politico. “I think this is the first time housing could actually matter in the swing states — before it was mostly in the coastal areas.”
Fairweather added that the importance of the housing issue was seen in the recent U.S. presidential debate, where President Joe Biden immediately mentioned housing issues as a priority if elected to a second term.
Inventory is climbing, but not at a rate fast enough to undo supply issues that have been “years in the making,” Fairweather added. Some of this is due to the impacts of the mortgage rate lock-in effect, where borrowers who otherwise would be willing to move and sell are motivated to hold onto a low mortgage rate they obtained in 2020-2021.
“It’s really hard for the housing market to get out of this funk because of the mortgage rate lock-in effect,” she told Politico. “I don’t think that the problems with the housing market are going to clear up in a matter of years. It could take a decade.”
The Biden administration has announced a slew of housing measures over the past year designed to broaden access to the market, most recently including a new grant program, a $469 million investment in renovations and the expansion of housing counseling availability and funding.
Prices are moderating somewhat, but remain historically high, said Orphe Divounguy, senior economist at Zillow to Politico.
“Today I think we’re in a much better place than we were in 2022, when prices were growing unsustainably,” said Divounguy. “That overheated pace could result in a crash, which is why the Fed had to act when it did.”
Meaningful rate declines, meanwhile, will take longer to emerge.
