ORANGE COUNTY, California (NV) – The economy is an election year issue. While the U.S. economy is technically healthy, those looking to buy a home in this post-pandemic era may not feel that way. How that affects President Joe Biden or former President Donald Trump remains to be seen, but they are paying particular attention to battleground states.
The analysis found that this year’s battleground states are Arizona, Nevada, Wisconsin, Michigan, Pennsylvania, Georgia and North Carolina; and calculated median monthly home payments using median sales prices, average mortgage rates and a 15% down payment.
“Voters in battleground states are concerned about housing affordability because rising home prices and mortgage rates, combined with a shortage of homes for sale, have made homeownership seem out of reach for some Americans,” Redfin senior economist Elijah de la Campa said in an analysis. “That’s especially true for low-income young adults who haven’t yet built up savings for a down payment, making them feel like it will be an uphill battle to achieve the same level of financial success as their parents.”
“While battleground states have historically had lower housing costs than blue states (and most still do), battleground state markets are not immune to the affordability woes that America has faced over the past few years,” he continued. “The inability to afford a home is making many voters feel bad about both the economy and their financial prospects.”
Typical monthly housing payments in battleground states have nearly doubled in four years: The median monthly payment has increased 92% to an all-time high of more than $2,000 since the last presidential election, driven by high home prices and mortgage rates, according to Redfin.
In battleground states, the median home price has increased nearly 40% since 2020 to more than $316,000. Meanwhile, mortgage rates have also skyrocketed.
“Surges in prices and mortgage rates have made it unaffordable for many people in the battleground state to buy a median-priced home. As a general rule, a household should not spend more than 30 percent of its income on monthly housing costs,” the report said.
The median income in the battleground state, according to Redfin, is more than $79,000. Buying a home typically takes up nearly 33% of income. Four years ago, they spent less than 22%. So a “battleground state family,” as Redfin puts it, would have to earn more than $86,000 to buy a median-priced home to stay under that cost-burden threshold.
By contrast, just four years ago, they needed to earn just a little over $45,000.
“To look at affordability another way, just over a third of homes for sale in battleground states this year were affordable to a median-income household, down from two-thirds in 2020,” the analysis said.
Of course it’s not just in the battleground states.
“Housing costs have also skyrocketed in both red and blue states since 2020,” Redfin said. “In red states, median home payments have increased 95% to over $2,000, and in blue states, they have increased 83% to over $3,000 — both records. Not to mention, a median-income household in a red state will spend about 33% of their income on a typical home, and those in a blue state will spend more than 41%.
It all really has to do with the pandemic and the corresponding housing boom. Home prices rose much faster than incomes, and then mortgage rates skyrocketed as the Fed raised rates in an effort to curb inflation. Meanwhile, we’re short millions of homes.
Obviously, all of this has happened before, or at least in some form. “This isn’t the first time housing affordability has become an issue in the Harris-Trump contest,” Redfin says. “Home prices skyrocketed ahead of the 2020 presidential election, in part due to the pandemic housing boom that began.”
Here’s the thing: Home prices are at an all-time high, and that’s not good for anyone looking to buy a home. But for those who already own a home, they’ve seen their home values skyrocket.
So there are younger voters who say their top concern is having a place to live, but perhaps not as much as older generations. Then there’s the idea that homeowners are in red states and renters are in blue states, and some studies show that homeowners are more likely to vote than renters.
But one study found that battleground counties where home prices rose significantly in the four years before an election were more likely to vote for the incumbent.
All of these are simply indications of how someone or some place will vote. But what we do know is that by 2022, there will be nearly 20 million cost-burdened homeowners and more than 22 million cost-burdened renters. (Ng.Tr) [kn]