Four years ago, Donald Trump declared that Joe Biden wants to “destroy our suburbs.”
“Your home will go down in value and crime rates will rapidly rise,” Trump warned. “People have worked all their lives to get into a community, and now they're going to watch it go to hell.”
That hasn’t happened, yet. But a new Biden policy proposal on affordable housing—“what could be an aggressive federal intervention in local politics,” according to The New York Times—threatens to reignite the firestorm.
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First, though, it’s worth noting that there is a problem. According to a new White House report, housing prices have tripled since 2000, while household income has merely doubled. In 2002, a median wage earner had to work just 55 hours to pay for monthly housing. By 2022, that same earner had to work 70 hours for monthly housing.
Much of the cost is due to increased labor costs, but “excessive regulations” are also to blame, according to the report. (Other factors, such as increased life expectancy and immigration, are also cited as contributors.)
As you might expect, the pesky regulations cited do not include environmental regulations that drive up the cost of land. Instead, the cost-drivers they refer to are more commonly called local zoning regulations (“prohibitions on multi-family homes, height limits, minimum lot sizes, square footage minimums, and parking requirements”).
“Their diagnosis is correct,” says Michael Strain, an economist at the conservative American Enterprise Institute (AEI). “There are major impediments to expanding the supply of housing. And if we were to increase it, the price of housing would go down.”
But should federal bureaucrats impose their one-size-fits-all big government policies on local communities?
By even flirting with the notion, Biden risks creating a NIMBY (“not in my backyard”) backlash, possibly leading some suburbanites (such as soccer moms who voted for Nikki Haley) back into the Trumpian fold.
On the other hand, young people—a key demographic Biden needs to win in November—are especially hurt by the rising cost of housing.
What is more, if you’ve been wondering why, despite many economic indicators improving, everyone still feels like the economy stinks, this is likely one of the big reasons.
According to the Associated Press’ Josh Boak, “If it wasn’t for shelter costs, inflation—Biden’s most pronounced economic problem—would be running at a healthy and stable 1.8 percent. Instead, it’s hovering around 3.2 percent.”
(Note: Interest rates are expected to come down this year. And in addition, a recent settlement agreed to by the National Association of Realtors has effectively killed the 6 percent industry-standard commission fee—which is to say, the price of housing is likely to decline, even if Biden does nothing.)
So what does this all mean?
The devil’s in the details, and the two big questions are 1) How does the Biden administration plan on lowering costs? and 2) How will it be perceived by the public?
For now, at least, Biden’s plan seems to hinge mostly on legal bribery—that is to say, tax credits and policies such as awarding “competitive grants to communities with plans to remove barriers to affordable housing and production in 2024.”
But those who are inclined to fear the impact affordable housing might have on their communities (and the price of their current home) might see this as simply the opening salvo.
If incentives and “carrots” fail to bring about compliance, will Biden overstep his executive authority (as he did on student loans)?
There are other potential red flags. Will Biden’s administration lard up these “carrots” with extra social justice sauce? One can imagine mandates that X number of units built must be for Section 8 housing—or that all new units must be powered by solar energy, etc.
Expanding too far beyond the scope of the stated project (reducing the price of housing) could doom the venture and increased political backlash.
There is potential for a political upside if Biden can be helpful in lowering housing costs. But it’s also a political landmine that has the potential to reinforce fears about big government, dredge up old fears and battles having to do with race and class—and alienate a bloc of suburban voters who seem to be trending in his direction.
In other words, housing—like every issue in 2024—is part of the culture war. Biden should tread lightly here, and treat this issue like it might win him—or cost him—the election. Because it could.
