When President Joe Biden first assumed office in 2021, the average monthly new home payment was $1,915, but it has since ballooned to $3,322 as of the third quarter of 2023, according to an analysis from The Wall Street Journal.
Following the increase in costs, housing is now less affordable than at any other time in recent history, with mortgage rates exceeding 7% and median housing prices rising to around $392,000 as of October, according to the WSJ. High inflation and a relative tightening of the supply of housing have resulted in the increasing prices, while the high mortgage rates are in response to the increasing cost of credit. (RELATED: Proposed Banking Regulations Won’t Save Sector But Will Hurt Your Wallet, Experts Say)
The average for a 30-year fixed-rate mortgage reached an all-time modern low on Jan. 7, 2021, reaching 2.65%, just days before Biden took office, according to the Federal Reserve Bank of St. Louis. Mortgage rates then reached a recent peak of 7.76% on Nov. 2 of this year, receding slightly to 7.03% as of Dec. 7.
WSJ analysis of the housing market:
Average monthly new home payment
when Biden took office: $1,787
Average monthly new home payment
today: $3,322 pic.twitter.com/OBqjAM9Hr3
— Tom Bevan (@TomBevanRCP) December 11, 2023
The rising mortgage rates follow hikes in the federal funds rate by the Federal Reserve, which put the rate in a range of 5.25% and 5.50%, a 22-year high, to combat high inflation that peaked at 9.1% in June 2022. Many economists partially attribute the high inflation to Biden’s huge government spending, which stems from acts he has signed as president like the American Rescue Plan and the Inflation Reduction Act.
Rent payments have not experienced as sharp of an increase as they are less responsive to rising interest rates, increasing from an average of $1,784 per month in the first quarter of 2021 to $2,184 per month in the third quarter of 2023, according to the WSJ.
“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 spokesperson told the Daily Caller News Foundation. “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.”
High interest rates add a substantial amount to the cost of a home due to the loan’s long duration, with just a 5% rate on a 30-year mortgage for a $320,000 house equating to nearly $300,000 in additional costs over the course of the loan. At 8% interest on the same $320,000 home, homebuyers would pay an additional $525,297.
Americans have especially felt the effects of rising inflation under Biden in the shelter sector, with costs rising 17.5% since January 2021, higher than the 17.1% gain in overall costs.
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