The Failure of Biden’s Housing Plan: Rising Costs and Inflation
Introduction:
During his State of the Union address, President Joe Biden pledged to lower housing costs, but his plan has proven to be a failure. This is evident in the case of Anthony and Caitlin Fumo, a newly married couple with a baby, who found that their income was not enough to afford a move to a bigger home. The Fumos realized that under Bidenomics, their monthly mortgage payments would increase by almost $2,500. The rising inflation rates and soaring home prices have made homeownership a luxury beyond the reach of the middle class.
Rising Home Prices and Inflation:
According to the latest data from the Bureau of Labor Statistics, the median home sales price has more than doubled in just three years, increasing by 114.5 percent since Biden took office. At the same time, average prices paid by consumers have risen by 19.3 percent, leading to an average annual inflation rate of 5.6 percent. These persistently high inflation levels have outpaced increased paychecks, with real earnings falling by 4.4 percent under Biden. As a result, the average American’s paycheck can buy about $50 less today than in January 2021, despite being $150 larger.
Impact on Middle-Class Families:
The combination of skyrocketing home prices and higher interest rates has made homeownership increasingly unaffordable for middle-class families like the Fumos. Higher interest rates have increased borrowing costs for mortgages, credit card debt, and student loans. Consequently, families are forced to spend an additional $13,300 per year for the same house compared to January 2021. The Biden administration’s official statistics claim that homeownership costs have only risen by about 20 percent during this time. However, these figures fail to consider real-world data such as home prices and interest rates.
The Role of Government Spending and the Federal Reserve:
The root cause of this housing crisis can be traced back to runaway spending in Washington, D.C. When the U.S. Treasury accumulated multitrillion-dollar deficits, the Federal Reserve intervened and created money to finance the borrowing. This led to a significant devaluation of the dollar, the fastest pace in four decades. The Fed’s manipulation of interest rates resulted in artificially low borrowing costs, which caused home prices to soar as buyers competed for limited supply.
The Consequences of Rising Interest Rates:
Once the Federal Reserve acknowledged the inflation problem it helped create, it had to raise interest rates to combat it. As a result, borrowing costs skyrocketed, leaving homeowners like the Fumos trapped in their current homes. The supply of existing homes has dwindled, and those available for sale come with high price tags as owners aim to secure larger down payments for their next homes. The Biden administration’s plan to build 2 million additional homes through deficit spending will only worsen the underlying problem of inflation.
The Need for Inflation Reduction:
The only solution to this housing crisis is to reduce inflation. However, President Biden has shown little willingness to address this issue. Instead of acknowledging that his policies have made homeownership unattainable for many families, Biden continues to make false promises. As time passes, more Americans are growing skeptical of these promises and becoming tired of renting. The administration’s plan to build more homes through inflation-causing deficit spending is not a sustainable solution.
Conclusion:
President Biden’s housing plan has failed to lower costs as promised. Rising home prices and inflation have made homeownership a luxury that is out of reach for many middle-class families. The root cause of this crisis lies in the government’s runaway spending and the Federal Reserve’s manipulation of interest rates. To alleviate the housing crisis, it is crucial to reduce inflation. However, Biden has yet to take the necessary steps to address this issue. As a result, more Americans are losing faith in his promises and growing tired of renting.
