Housing market affordability is so strained and difficult to fix that politicians are resorting to scapegoating

Earlier today, Charles Payne had me on Fox Business. He gave me a chance to tell his audience about ResiClub, and some of my takes on the U.S. housing market.

A central focus of the chat was the fact that strained housing affordability has politicians, who are moving into election season, under pressure to act. Some of their ideas might be good, but some will be good ole fashion scapegoating.

Here’s what I told Payne:

“Taking into account mortgage rates, incomes, and [national] home prices, [housing] affordability right now is strained at the worst levels in about four decades. And so when you have that, and a lot of homebuyers can’t get in, and a lot of homeowners can’t sell and buy something else because they can’t afford those new monthly payments, what you see is a lot of political scapegoating. And so they’re going after, in some municipalities, short-term rentals/Airbnbs and talking about the institutional side of the market. And then also scapegoating real estate agents—the DOJ is going after NAR. They act like lowering commissions would improve housing affordability, going after soccer moms making $60,000 a year because it [being a real estate agent] is the only job that works around their kids’ schedule. But at the end of the day, if you look out at a lot of the countries that have lower commissions, they don’t have better housing affordability. These [Western] European countries have worse housing affordability. So it’s a lot of scapegoating. And really the only thing [alongside smart fiscal/monetary policy] that is going to improve housing affordability is supply, it’s the boring things, more ADUs, upzoning, tax policy that works for new construction and not against new construction, lower fees on homebuilding. All the boring stuff that would long-term increase supply, that’s what would improve housing affordability,” I told Payne.

Putting aside personal views on agent commissions, it’s pretty clear that some politicians are using the NAR proposed settlement as a political talking point—some even wrongly suggesting that most homebuyers would save $10,000 as a result. (If commissions fall, sellers—not buyers—would likely benefit more).

Later in the discussion, I also weighed in on the homebuilding sector and the long-term value of homeownership.

But the main reason I went on Fox Business today was to gently remind the ENTIRE housing sector—everyone from homeowners, buyers, builders to single-family landlords—that political rhetoric could soon heat up. That’ll happen when housing affordability gets this strained right before an election season. We’ll also likely see an increase in housing misinformation.

On Tuesday, we learned that U.S. single-family home prices, as tracked by the Case-Shiller National Home Price Index, fell -0.1% between the December 2023 reading and the January 2024 reading.

On a year-over-year basis (January 2023 to January 2024), U.S. home prices are up +6.0%.

Zoomed out, U.S. home prices are up +0.7% from the 2022 peak (June 2022) and up +44.3% since March 2020.

The ResiClub chart below is without seasonal adjustment. I created this chart—which shows month-over-month home price change—a few years back to help readers see the seasonality of national home prices. As you can see below, the 0.1% decline between December 2023 and January 2024 is slightly weaker than the normal seasonal pattern.

ResiClub PRO research articles from the weekend:

One part of the 'echo' housing boom: Property taxes (it’s jam-packed with state-level data)

Overvalued or undervalued? Moody's Analytics' latest assessment for 403 housing markets