Voters will carefully consider housing affordability in 2024
The 30 year mortgage rate is still near 7% and rent is decreasing but still way above pre-pandemic levels
Mendon Capital Advisors President and CIO Anton Schutz says once the Fed starts cutting rates, they'll have to 'keep cutting.'
Voters are focused on the housing affordability crisis as the contentious 2024 presidential election heats up.
More than half of homeowners and renters, 53.2%, admitted that housing affordability will impact who they vote for in November, according to a recent survey from Redfin.
To gather data, the survey, which was conducted by Qualtrics, was fielded on roughly 3,000 U.S. homeowners and renters in February.
MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU
"Housing affordability is top of mind for voters because elevated mortgage rates and home prices, along with an acute housing shortage, have pushed the dream of homeownership out of reach for many Americans," Redfin Chief Economist Daryl Fairweather said in a statement.
Fairweather argued that "while the economy is strong on paper, a lot of families aren’t feeling the benefits because they’re struggling to afford the house they want or already live in."
A home for sale in Los Gatos, California, on Wednesday, Feb. 7, 2024. (Photographer: Loren Elliott/Bloomberg via Getty Images / Getty Images)
Last week, the average rate on the benchmark 30-year fixed mortgage dropped to 6.88%, down from 6.94% in the prior seven-day period, according to Freddie Mac's latest Primary Mortgage Market Survey.
Mortgage rates started to rise in early 2022 after the Federal Reserve increased interest rates to combat inflation. Rates reached as high as 7.79% by the end of October 2023. Since then, they have hovered around the 7% range.
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Sellers who purchased when rates were 2.5% to 3% did not want to sell as borrowing rates increased. The result was a growing number of buyers and sellers feeling sidelined from the market. In turn, supply dried up and increased home prices as buyers competed for fewer options.
Redfin CEO Glenn Kelman said the U.S. will have "a tough 2023" in the real estate market on "The Claman Countdown" on Tuesday, August 15, 2023. (Photo by Stephen Brashear/Getty Images for Redfin / Getty Images)
According to the survey, about 64.2% of homeowners and renters say the current environment around housing affordability makes them feel negative about the economy.
Just last week, President Biden unveiled a slate of initiatives to try and improve affordability as he seeks re-election.
Part of his efforts include calling on Congress to pass a mortgage relief credit that would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. He is also calling on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter home.
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This proposal to "unlock inventory of affordable starter homes" is estimated to help nearly 3 million families, the Biden administration said.
The Biden administration is also calling on Congress to pass legislation to build and renovate more than 2 million homes to close the housing supply gap and lower costs for renters and buyers.