Home affordability just hit a 17-year low, which means the dream of homeownership remains unattainable for the average person. Amid a cost-of-living crisis, saving enough for a downpayment and then affording a monthly mortgage payment has become a Sisyphean task—and radical leftist policies are to blame.
Adding up the monthly cost of principal and interest on a mortgage, property taxes, and insurance amounts to half the average wage earner’s monthly take-home pay. That would be a stretch even in good economic times, but it is downright impossible when the prices of necessities such as food and energy have exploded over 20% and 50%, respectively, in less than four years.
When people are already borrowing on credit cards just to pay for groceries, spending half your income on housing just is not doable.
Even scarier, the cost to own a home in about one-third of the country requires more than 60% of the average wage earner’s take-home pay: more than twice the recommended guideline.
But the problem is also widespread: In 98.8% of counties nationwide, homes are less affordable than their respective historic averages.
Today’s stratospheric homeownership costs and the frozen housing market resulted from the fatal combination of record-high home prices and rising interest rates. Both factors are the result of the radical Left’s big-government agenda.
Forty-year-high inflation was created by a profligate Congress and White House spending trillions of dollars that the nation did not have. In 2020, the year before the radical Left took control of the federal government, prices rose just 1.4%. Just 18 months later, prices were rising almost that fast in a single month.
Just as the predictable result of government overspending was inflation, so, too, was the rise in interest rates that followed. The sheer size of the multitrillion-dollar deficits of the last several years caused prices and interest rates to jump significantly.
That means you not only need to borrow more when buying a home, but you will pay more interest on the loan too. The result is a monthly mortgage payment on a median price home that’s twice as high as it was in January 2021.
Ordinarily, high sale prices would entice home builders to construct more houses and increase their profits. But inflation has driven up the input costs for building a home to record highs, eating away at homebuilders’ profit margins. That means fewer new homes are being added to the market.
Simultaneously, many existing homeowners have a huge incentive not to sell: They can’t afford to lose their ultralow interest rate. Millions of people got mortgages or refinanced loans at around 2% or 3% in 2020 and 2021. Selling their home today means losing that interest rate in exchange for one at 7% or 8%.
Since that’s prohibitively expensive in many cases, sometimes doubling the monthly mortgage payment, homeowners are locked in with the golden handcuffs of yesterday’s low interest rates. That means fewer existing homes are being added to the market, in addition to the shortage of new homes.
The situation is so bad that home sales have plummeted to the lowest level of the 21st century, even below the numbers seen during the government-imposed lockdowns of 2020, when it was illegal just to go home shopping in many states.
Today’s housing market would be painful enough if it happened in a vacuum, but the policies of the radical Left have made virtually every aspect of life more expensive, not just homeownership. This has created a divide between those who were fortunate enough to buy a home before the radical Left implemented their agenda and the rest of America who seem doomed to rent forever.
The only way to change that bleak fortune is to reverse the public policies that got us here. Before the dream of homeownership can be restored, the big government nightmare must end.