Housing Costs Account For 90% Of Inflation – The Role Of The Housing Crisis In The 2024 Presidential Race

A critical issue in the upcoming 2024 presidential election is the current housing crisis in the United States. Both major parties are grappling to present solutions to increasingly worried citizens. Realtor Mike McCann, who has helped Philadelphians buy and sell homes for decades, said the market is unlike anything he's ever seen. 

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"Sales are down dramatically from a couple years ago," McCann told The Financial Times. "The crazy thing is that in any other downturn in my 38 years, prices start to drop, drop, drop – but inventory is low. People have frozen, they're saying, ‘I'm not selling my house because I have a 2.6 percent mortgage rate.'"

This reluctance to sell and high mortgage rates have created a perfect storm that has driven housing-related expenses to account for nearly 90% of the inflation recorded in July. With the Federal Reserve expected to start cutting interest rates in September, some relief may be on the horizon for new buyers. However, experts warn that the effects may be slow, making this a pivotal issue as the election approaches. 

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The cost of living is a top concern for Americans, which poses a challenge for candidates trying to secure wavering voters. Vice President Kamala Harris has introduced proposals aimed at addressing housing affordability. One includes a credit of up to $25,000 for first-time homebuyers. 

"We should be doing everything to make it more affordable to buy a home, not less," Harris said during her speech in Raleigh, North Carolina.

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Harris has also called for constructing three million new housing units to sell and rent over the next four years. Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, told CNBC that there have been far fewer new single-family homes and multifamily rental buildings built since the foreclosure crisis between 2007 and 2010. Many experts say that increasing the supply will help resolve housing affordability. 

Other initiatives Harris plans to introduce are tax breaks for homebuilders to aid with increasing supply and measures to crack down on unfair practices by corporate landlords. 

Former President Donald Trump has taken his own approach to resolving the housing crisis, stating that crackdowns on both legal and unauthorized immigrants are necessary to free up housing for U.S. citizens. He has also expressed that the price of energy contributes to housing affordability and plans to increase the supply of energy resources with his call to "drill, baby drill."

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Beyond these two ideals, Trump’s Republican platform pledges to allow home construction on federal lands and offer tax relief for first-time homebuyers. 

For many Americans, the struggle to afford housing continues. Rising rents and new home prices make it increasingly difficult for the average family to make ends meet. According to the National Association of Home Builders, 75% of U.S. households can't afford a median-priced new home. 

Given the complexity of the housing crisis and its impact on inflation, voters must consider the long-term implications of the proposed solutions. Consulting a financial advisor can provide personalized advice tailored to individual circumstances, helping to navigate this challenging economic landscape.

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