Home Prices Up More Than 20 Percent Since Biden Took Office

Housing prices are up 20 percent since President Joe Biden took office in 2021, a development that could present a challenge as he seeks reelection next year, an analysis by real estate platform Redfin said.

The housing market has been struggling under the weight of elevated mortgage rates, high prices and low supply dynamics that have priced out buyers looking to secure their American dream of home ownership.

Redfin's chief economist, Daryl Fairweather, said in an analysis on its website that the rise in housing prices may be part of the reason Americans tell pollsters that they disapprove of Biden's handling of the economy.

"That's a problem for his reelection bid," Fairweather said, pointing to a CBS News poll from September that showed that only 65 percent of voters approve of Biden's management of the U.S. economy. "Even though the overall economy is strong, high housing costs are making many Americans feel poor."

The White House told Newsweek in a statement that they cannot comment on the election but pointed to a variety of efforts by the administration to assist Americans on housing costs.

"President Biden has taken action to lower housing costs by expanding federal financing to build and preserve more housing, reducing mortgage insurance premiums, and helping student loan borrowers qualify for mortgages," a White House official told Newsweek.

"More work needs to be done—and the President has a plan to lower housing costs by building and preserve nearly two million homes, providing down payment assistance to homebuyers who need it, and lowering rents through rental assistance for hundreds of thousands of families," they added.

The White House official called on Republicans in Congress to "pass the President's plans to lower housing costs, rather than trying to cut taxes for the wealthy and large corporations."

Newsweek contacted House Speaker Mike Johnson's office for comment via email on Wednesday.

Redfin's report said that young people who aspire to buy homes have been particularly hurt as mortgage rates are upwards of 7 percent, close to a two-decade high.

"Even though affordability will become less of a problem in 2024, many Gen Z and millennial voters will be playing financial catch-up for a while," Fairweather pointed out.

Fairweather suggested that as the 2024 presidential campaign ramps up, she expects some policy proposals to help Americans in their homebuying pursuit.

"We expect President Biden and his opponents to make splashy housing policy proposals to try to lure voters who are unhappy with their economic prospects," Fairweather said.

"Democrats are likely to focus on subsidizing down payments for first-time homebuyers, promoting inclusionary zoning and funding housing vouchers, which are all popular with liberal voters. Republicans are more likely to focus on reducing regulations that limit development."

Newsweek reached out to Redfin via email on Wednesday for comment.

Outlook for housing market in 2024

Redfin anticipates some improvement in the housing market next year.

The company anticipates the 30-year fixed rate to fall to about 6.6 percent for the year. By the end of the year, overall home sales are expected to have increased 5 percent over last year to 4.3 million. There will be an improvement on the existing homes market, which is essentially frozen right now. Sellers in this segment of the market have stayed put, unwilling to enter a market where rates are hovering above 7 percent and give up cheaper loan terms they secured in years past.

In the first quarter of 2024, Fairweather anticipates existing homes sales could be on pace to register 4.1 million, an improvement on the 3.85 million sales in the fourth quarter of 2023.

"A crucial difference between 2024 and 2023 will be sales gaining momentum throughout the year instead of losing momentum," she said.

As homeowners come to terms with the notion that the era of sub-3 percent mortgage rates is over, they will look to list their homes for sale. The rise in supply will help bring down prices, Redfin said.

"Home prices will fall because supply will rise more than demand," Fairweather pointed out. "We've recently seen a double-digit annual increase in homeowners contacting Redfin for help selling their home, alongside a small drop in requests from prospective buyers."

The expectation is during the second and third quarters, the time of the year when activity is at its most vibrant, prices will decline by 1 percent, according to Redfin. This is compared to 2023 prices, which are up 3 percent.

"That will mark the first time prices have declined since 2012, when the housing market was recovering from the Great Recession, with the exception of a brief period in the first half of 2023," Fairweather said. "Home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless."

Young people are becoming increasingly pessimistic about their prospects of owning a home, Redfin found, and that they are more likely to embrace renting.

Nearly one in five millennials who responded told Redfin in a September survey that they believe they'll never own a home.

"For some, renting is not a choice: Nearly half of those survey respondents said homes for sale are too expensive and a similar share said they can't afford to save for a down payment," Fairweather said.

"With prices so high, buying a home doesn't offer the same financial upside to young millennials and Gen Zers as it did baby boomers and Gen Xers."

Redfin said it expects rents, particularly of large units, to tick up in 2024.

"However, there will be downward pressure on prices for smaller rentals because there are more of them and a backlog waiting to hit the market," Fairweather said. "Builders, who have focused on building smaller apartment units since around 2019, will start to increase their investment in family-friendly rental units."

Update: 12/06/23, 2:14 p.m. ET: This article was updated to add comments from the White House.