The “Affordable Housing” Problem

Heather Long, formerly of CNN and late of The Washington Post, now the Chief Economist for Navy Federal Credit Union, tweeted out an interesting economic graph, showing the rate of increase in home prices during the last five years. She wrote:

The Case-Shiller US Home Price Index is up 52% since January 2020.

That’s great news for anyone who owns a home. But it’s onerous for anyone who wants to buy.

The typical mortgage cost is basically double now versus 2020. And that $330,000 home price in 2020 is now ~$500k.

Home prices have cooled a bit this spring. Many sellers are reducing prices a bit and offering incentives. But it’s barely moving the needle on the big picture of the past 5 years.

The problem with inflation is that it can be reduced or even halted — though the Federal Reserve Board’s target is for 2% inflation, not no inflation at all — but inflation normally creates its own baseline: while the rate of increase may slow, absent a serious recession, prices almost never drop to where they were prior to inflation, though they did due to the housing market crash, between 2007 to 2012.

I chose to go to her source, and change the documented period, from five years to ten, to cover the first Donald Trump Administration as well as the time under Joe Biden.

While Mr Trump was our 45^th President, home prices increased at a moderate but fairly steady rate, then briefly leveling off due to the response to Covidiocy.

Yet, almost as soon as our 46^th President took office, the rate of increase in home prices soared, increasing to half again what they were during Mr Trump’s first term.

Now, we’re seeing a slight dip. The graph shows only the first four months under President Trump’s current term, and we cannot know how things will go over the next 3½ years, but this is important.

Of course, a lot of people haven’t bought homes, but rent instead, and from the same source, the St Louis Federal Reserve Bank, we can see that rental prices have jumped at a far faster rate under President Biden than under President Trump’s first term. During Mr Trump’s first term, February 2017 through January 2021, rental prices increased from 345.073 –using 1984 as the baseline of 100; that’s just how the Fed does things — to 344.469, rents increased 13.29%. During February 2021 through January 2025, the index went from 345.073 to 429.017, an increase of 24.33%. The rate of increase nearly doubled!

Note that, graphically, the rate of increase surge under Mr Biden had rent increases lagging about a year behind home price increases, much of which can be attributed to rent increases coming as leases were renewed. If that pattern persists, any change in the rate of rental increases won’t be seen until next January.

Numbers don’t lie: the “affordable housing” crisis is the result of Bidenflation! Liberal economics is nothing more than failed economics, for everybody.