How the 2024 Election Could Change the Housing Market

The housing market in the United States is no stranger to the influence of political decisions, and the upcoming 2024 presidential election will be no different. Housing affordability has become a critical issue in recent years as home prices have risen significantly, making it difficult for many Americans – especially younger generations – to enter the market. As the election approaches, potential policy changes could affect the entire real estate landscape, making it important for home buyers, sellers, and investors to understand what may be on the horizon.

One of the biggest housing-related issues in the 2024 election revolves around the affordability crisis. Housing prices have risen more than 20% since the last election cycle, putting homeownership out of reach for many potential buyers. Both President Biden and his opponents have recognized the importance of addressing this issue, and housing has become a key issue for both parties. Democrats tend to support policies such as subsidizing down payments for first-time buyers, promoting inclusionary zoning, and funding housing vouchers. These measures are designed to make homeownership more accessible to lower-income and first-time buyers, many of whom have been priced out of the market. On the other hand, Republican proposals are more likely to focus on reducing regulations that limit development, with the goal of increasing housing supply to address affordability through market forces.

One key policy proposal that has received attention is subsidizing down payments for first-time homebuyers. The average down payment required to purchase a home has reached record highs, creating a significant barrier for younger Americans and families trying to enter the housing market. Subsidizing down payments would aim to reduce this barrier, making it easier for those without substantial savings to transition from renting to owning. Such a policy could potentially increase the number of first-time buyers, thereby increasing demand in certain segments of the market, which in turn could drive price changes. This type of government intervention could help level the playing field for those who have been most affected by skyrocketing house prices in recent years.

Another important factor to consider is the focus on reducing regulatory barriers for homebuilders. Building regulations, including zoning laws, have often been cited as a major contributor to the housing shortage. Restrictive zoning, particularly single-family zoning, limits the availability of affordable housing by limiting the types of properties that can be developed in certain areas. Reducing these regulatory barriers would make it easier for developers to build more units, especially multifamily housing, which could alleviate some of the supply constraints that have led to the affordability crisis. Republicans are likely to push for regulatory reform that could lead to an increase in housing supply, potentially easing the demand pressures that have driven up home prices.

Political discourse also highlights regional disparities in the housing market. In places like coastal Florida, where housing prices soared during the pandemic, there is now significant potential for a price correction due to increased climate risks and insurance costs. In contrast, more affordable and climate-resilient areas, such as Rochester and Albany in New York, are seeing price increases as people seek stability and value. These regional dynamics are also influenced by political priorities, as some states pursue zoning reform and affordable housing projects more aggressively than others. Local governments, regardless of the federal administration, are expected to continue to play a significant role in addressing housing affordability, with initiatives such as land value taxes to encourage development in key urban areas.

Another important aspect that could shape the housing market is the broader economic policies that emerge from the election. The Federal Reserve’s interest rate decisions, which are often influenced by the political climate, directly affect mortgage rates, which in turn affect the affordability of homeownership. If the newly elected administration focuses on controlling inflation and stimulating economic growth, there may be indirect effects on mortgage rates that could either help or hurt potential homebuyers depending on the direction of policy. For example, if rates drop to the 5% range, as some economists predict in an optimistic scenario, it could provide a much-needed reprieve for buyers, making homeownership more affordable compared to the historically high rates of recent years.

The 2024 presidential election will undoubtedly have a significant impact on the U.S. housing market. With both major parties outlining different approaches to addressing the housing affordability crisis – from providing direct financial assistance to first-time homebuyers to reducing building regulations – the outcome of the election could set the tone for the housing market for years to come. Understanding these potential changes can help homebuyers and sellers make informed decisions as they navigate an evolving market. As the election approaches, staying informed about policy proposals and understanding their impact will be critical for anyone involved in the real estate market.