Americans are facing a new housing crisis, one that makes the crisis of 2008 look like a mere economic blip.
The housing crisis of 2008 was driven by sub-prime mortgages being approved for people who had no financial means to pay for their homes. Many people had variable rate mortgages, and when those rates froze, or increased, people could no longer afford their monthly mortgage payments.
Housing prices collapsed, and many people, myself included, had mortgages that were “underwater,” meaning we owed more than the home was worth. As a result, approximately $3.4 billion in real estate wealth was destroyed.
Today, we have the opposite problem. There is a dearth of homes on the market, those homes that are for sale are priced at a level that excludes the middle class and young Americans from purchasing their first home. Rents are also sky high.
The 2024 housing crisis was infinitely preventable. It is the direct result of President Biden’s failed economic policies, which pumped trillions of dollars into the economy, driving inflation. As a result, the Federal Reserve was forced to raise interest rates, effectively pricing millions of Americans out of the market.
In the first 20 years of the 21st century, there were approximately 5.5 million fewer homes built than were needed, according to the National Association of Realtors. In addition, high interest mortgage rates are causing people who want to sell their homes, and move, to sit on their house, as they do not want to lose their low mortgage interest rate, refinanced during COVID.
As a result, the price of homes has increased. By August of 2023, the median home price in the United States was at $435,450, up from a median sales price of $260,345 at the end of 2019, according to Rocket Homes.
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Biden’s kowtowing to the green mafia has also driven the price of housing up by $31,000, according to the Heritage Foundation.
It is nearly impossible for all but the richest Americans to afford to purchase a home. More than 75% of the nation’s households are unable to purchase a home — which is more than 103 million households.
This is why the profile of people living in their parents’ basement has changed. Those living “downstairs” are no longer the high school drop-outs, smoking weed, and playing video games while eating pizza.
In fact, more than 50% of “Gen Zers,” those people 18- to 25-years-old, are now forced to live at home, because they cannot afford either rent or a mortgage.
And that shouldn’t be a shock. To afford a median-priced home, Americans need an annual income of more than $110,000, up 46% since 2020. That means that only 18% of individuals or 34% of households can now afford to pay the mortgage on a home, let alone save the money for downpayment.
Building new homes may help inventory, but the cost will be high. The cost of construction materials are up more than 35% since the pandemic, according to ABC.
And even if you can afford a home, you may not be able to afford to insure it, as insurance premiums are up 23% since January 2023.
So, why not rent?
From January 2021, when Biden took office, to June 2022, there was a nearly 25% increase in rental rates in the United States. And the trend has only continued.
So, the American housing market is in a death spiral. People such as myself are sitting on cheap mortgages. In fact, nearly 80% of Americans have a rate below 5%. Why would they sell in this market? We won’t sell and we won’t move. This reduces the inventory of homes available for sale, driving the cost of housing up for everyone.
When you also factor in that more than 12 million illegals are now in the United States, demanding housing, rental prices will not come down anytime soon.
The next administration must pursue pro-growth, anti-inflation policies. Eliminate regulations that drive the price of housing up and encourage investment. Grow the economy, not by government spending, but via pro-growth policies, which will result in lower interest rates, thereby increasing the inventory of housing on the market.
The solutions to the housing crisis of 2024 are simple. The question is, will the next president have the courage to implement them.
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Jim Nelles is a Navy veteran and supply chain consultant based in Chicago. His articles have appeared in the Washington Examiner, Newsweek, Foxnews.com, and the Daily Wire. He has served as a chief procurement officer, chief supply chain officer, and chief operations officer for multiple companies.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.
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