Poll after poll revealed that inflation was voters’ top concern in the November elections. This surprised some in the media, given that inflation had fallen dramatically from its June 2022 peak of over 9 percent annually. Yet these commentators ignored the outsize impact of rising housing costs, which contributed to voters’ frustrations about the economy and fueled urban areas’ rightward shift in 2024.
It’s little wonder that voters were alarmed by housing costs, which consume a third of a typical family’s expenses. While prices in other sectors stabilized, in housing they kept climbing. Excluding lodging, the core Consumer Price Index inflation measure was very stable, increasing at only 2 percent a year just before the election. Annual housing costs, by contrast, were going up almost 5 percent at that point. Renters, in particular, faced sudden inflationary jumps when renewing leases.
While homeowners may have seen property values rise, those looking to move or refinance, or those with variable-rate mortgages, were slammed by soaring mortgage rates. When Joe Biden entered the White House in 2021, the average 30-year fixed-rate mortgage was just over 2.6 percent—the lowest in American history. By November 2024, it had inflated to nearly 6.8 percent. Since the government excludes mortgage rates from its inflation statistics, many commentators failed to recognize the significance of this surge. But removing mortgage rates from federal data doesn’t mean that they don’t affect ordinary Americans. A recent research paper, examining why American consumers were more pessimistic about the economy than official numbers seemed to warrant, found that high borrowing costs (such as mortgage rates) explained much of the gloom.
The rise in both housing prices and mortgage rates made it harder than ever for Americans to buy homes. Homebuyers saw the median sales price for a new house rise from about $330,000 when Biden took office to nearly $440,000 just before the 2024 election. In October, the Urban Institute found that monthly payments on a new mortgage would consume more than 30 percent of the typical family’s income—a level just shy of that of November 2005, at the so-called housing bubble’s peak. Higher prices and mortgage rates explain why the rate of new home sales plummeted after Biden took office.
The swelling housing costs hit some groups especially hard, including Americans under 30, predominantly renters or first-time homebuyers. In one poll, one-third of younger voters called the cost of living their biggest concern—by far the largest proportion identifying any single issue. In another poll of under-30 voters, housing came in third, behind overall inflation and health care. This partly explains why young voters made the greatest shift toward Donald Trump of any age group, compared with the last election.
Housing prices have spiked dramatically in many urban areas, helping shift city voters to Trump’s camp. The core urban counties swung 7.8 percentage points toward Republicans in 2024, compared with just a 3.8-point shift among the most rural counties. Counties with the highest cost of living, many of them urban, also saw the greatest rightward shift relative to 2020.
This importance of housing was unprecedented in the modern election era. Arguably, the last presidential campaign in which it played such a crucial role was in 1948, when homecoming veterans, eager to start new families, found themselves with dilapidated and inadequate lodging. The domestic section of that year’s Democratic platform prominently featured calls for rent control and more government housing construction. Even the Republican platform proposed federal grants for low-income rental projects.
In 2024, both presidential candidates promised to address housing. Kamala Harris’s campaign mirrored the 1948 Democratic platform, calling for rent control and government funds to build more homes. She also promised to provide tens of thousands of dollars in down-payment assistance for homebuyers. Trump, meantime, pledged to lower mortgage rates, though his proposed mechanism was unclear.
Most of the candidates’ proposals would only have worsened the housing market’s woes. The most sensible policy shared by both camps was to open more federal land for housing. The U.S. government owns almost 30 percent of the country’s land, and though most of it isn’t located near high-cost cities, selling off underused federal buildings and scrubland around major metros could allow more homebuilding and reduce costs. But the best thing the feds could do for suffering city residents would be to get out of the way—by, say, rolling back excessive energy-efficiency regulations and building-code mandates.
High housing prices have helped make cities politically competitive for the first time in decades and led many young voters to consider Republican candidates. Whichever party reduces regulations and keeps housing prices down may secure these voters’ loyalty well into the future.
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