If the prospective homebuyer vote matters somewhat in this election, Biden’s effort to make the market for new construction more expensive is a foolish move.
On Thursday, CBS Mornings took a look at “one economic indicator that could hit home in the presidential election: the high cost of buying that first home and living the American dream.” Home ownership has become all but “unattainable” in some of America’s most hotly contested battleground states, “where would be buyers face housing shortages and high interest rates.”
In his dispatches from Phoenix, Ariz., CBS correspondent Ed O’Keefe took the lay of the land and found profound apprehension over the unmanageability of housing costs. “Affordability is certainly the issue here,” said local realtor Nathan Claiborn. What were once “starter homes” have become “move-up homes.” Inventories are persistently low in desirable parts of the country, where new construction is not keeping pace with demand. And the competition in the housing market that drives up prices in concert with the inducements in a higher-interest environment to contribute more to a down payment ensures that, as Claiborn observed, buying a home today is “mathematically out of reach for lots and lots of people.”
O’Keefe noted that each of the prospective homebuyers with whom he spoke said their vote in the upcoming presidential election was up for grabs. Those voters’ desire to see the political class address housing costs will be a “big factor” in determining their preference in November. Joe Biden seems attuned to these concerns. In March, the president devoted several days to retailing his plan to lower housing costs, most of which only exemplified the economic nescience that has plagued this administration from the start.
The housing market is burdened by low inventory and high demand. Biden would exacerbate the latter if he got his way, which would involve providing first-time home buyers with a $10,000 tax credit while also proposing another $10,000 to current homeowners who sell their “‘starter home’ in order to jump into a bigger house. Subsidizing already excessive demand is no way to cope with the problems of excessive demand.
But the president did not wholly ignore the shortage of homes on the market. He also pitched a program deemed the “Neighborhood Homes Tax Credit,” which would bake new tax credits into the tax code for builders to renovate or construct entry-level homes. These “proposals amount to more of a second-term vision than a readily implementable plan,” Politico confessed. Yet, they also signaled the White House’s recognition of the problem in the housing market. “The bottom line,” Biden told a conference of local officials, “is we have to build, build, build.”
March was a long time ago. In the interim, the administration has defaulted back to its reflexive deference to environmental activists, who seem to have convinced the administration that it’s in the nation’s interest to make building new homes as expensive a prospect as possible.
In the coming weeks, the administration is expected to promulgate a new federal mandate that will compel new homes to adhere to “the latest international standards for energy efficiency.” The regulatory proposal will force builders to incorporate “efficient” heating and cooling systems, lighting, and insulation into new construction. If implemented, the rule would have the effect of reducing the minuscule contributions to global heat-trapping emissions levels from single-family homes while also making those homes significantly more expensive to purchase and maintain.
“An analysis by the Department of Housing and Urban Development found the proposed policy would add $7,200 to the average price of a new home but would cut energy costs by nearly $1,000 a year,” Politico reported. That last figure is slightly misleading. Many so-called “efficient” appliances have lower monthly operating costs, but they often require more maintenance and are more expensive to purchase at the outset.
That’s the sort of thing new homebuyers consider carefully before putting in an offer. It’s not the sort of thing technocrats possessed of a utopian vision for the reorganization of society around their ideological preferences seem to care much about. If the prospective homebuyer vote matters at the margins of this presidential election, Biden’s effort to make the market for new construction even more expensive is a foolish move.