In Swing States, Typical Homebuyer’s Monthly Payment Has Nearly Doubled Since The Last Presidential Election

Rhea-AI Summary

Redfin's analysis reveals a dramatic increase in housing costs across swing states since the 2020 presidential election. The median monthly housing payment for homebuyers in these states has nearly doubled, rising 92% to $2,161. This surge is attributed to both rising home prices (up 40% to $316,063) and higher mortgage rates (currently 6.89%).

Affordability has significantly declined, with only 35.1% of homes listed in swing states being affordable to median-income households, down from 65.5% in 2020. The typical swing-state family now needs to earn $86,421 annually to afford the median-priced home without exceeding 30% of their income on housing costs.

This affordability crisis is a major factor in the 2024 presidential election, with over 90% of adult Gen Zers considering it important in their voting decision. The issue affects all states, with similar trends observed in red and blue states.

Positive

• Home values have increased significantly, benefiting existing homeowners' wealth through housing equity
• Both major presidential candidates have announced plans or strategies to address housing affordability

Negative

• Median monthly housing payment in swing states has nearly doubled (92% increase) since 2020
• Only 35.1% of homes in swing states are now affordable to median-income households, down from 65.5% in 2020
• Median home-sale price in swing states has increased by 40% since 2020
• Average mortgage rates have more than doubled since early 2021
• Typical swing-state family must now earn $86,421 to afford the median-priced home, up from $45,140 in 2020
• Black and Hispanic families face greater affordability challenges compared to white and Asian families in swing states

Insights

Financial Analyst

The steep increase in housing costs in swing states, coinciding with a significant rise in mortgage rates, poses a critical issue for potential homebuyers. With the median monthly payment nearing $2,161, this represents a 92% rise since the last presidential election, starkly affecting affordability.

From an investment standpoint, existing homeowners in these regions might see a boost in their home equity, benefiting from long-term gains. However, the flip side is that the pool of potential buyers is shrinking, as fewer individuals can afford to step into the market. This could slow down housing market turnover in the near term, impacting real estate brokerage services, mortgage lenders and related sectors.

The dilution of affordability from two-thirds of listings in 2020 to just over one-third now is a significant squeeze. Investors should note that while existing homeowners and real estate investors might see asset appreciation, the broader market might experience reduced liquidity and higher barriers to entry for new buyers.

Investors should watch for potential policy changes aimed at easing housing affordability, which could shift market dynamics. Overall, the data suggests a mixed impact on stakeholders, emphasizing the importance of strategic positioning.

Market Research Analyst

The report highlights a critical trend in housing affordability that could sway consumer behavior and sentiment. The challenges faced by swing-state residents, spending 32.8% of their income on housing, up from 21.8% in 2020, suggest a constrained consumer market. This drop in disposable income for other expenditures can affect retail, services and other sectors reliant on discretionary spending.

The rise in home values, although beneficial for current homeowners, indicates a potential for increased economic volatility. As more of the population struggles with affordability, there is a growing risk of reduced social mobility and economic disparity, which can impact long-term consumer confidence and market stability.

For retail investors, understanding these trends is crucial. Companies tied to discretionary spending might see reduced growth prospects, while those in the affordable housing sector could find new opportunities. This data underlines the importance of sector diversification in investment portfolios.

Just over one-third of all homes listed for sale in swing states so far this year were affordable to a household earning the median income, down from two-thirds in 2020

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The median monthly housing payment for homebuyers in swing states has nearly doubled since the 2020 presidential election, rising 92% to an all-time high of $2,161, as both home prices and mortgage rates have soared. This is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Housing costs have also skyrocketed in red and blue states since 2020: Homebuyers’ median housing payment has risen 95% to a record $2,066 in red states and 83% to a record $3,311 in blue states.

Redfin’s report is based on its analysis of housing-market data and incomes for blue, red and swing states, from 2016-2024. The data is annual for 2016-2023; the 2024 data includes January through May. The report focuses primarily on swing states because voters in those states will decide the winner of the 2024 presidential election, and housing affordability—or lack thereof—is a crucial issue on voters’ minds. Redfin considers this year’s swing states to be Arizona, Nevada, Wisconsin, Michigan, Pennsylvania, Georgia and North Carolina.

The median home-sale price in swing states has increased nearly 40% since 2020, reaching a record high of $316,063 in 2024. The average mortgage rate is currently 6.89%, more than double the record low of 2.65% at the start of 2021—intensifying affordability challenges even further.

Typical swing-state home has gone from affordable to unaffordable for the average family since the 2020 election

The steep increase in prices and mortgage rates has made the median-priced home ($316,063) unaffordable to the typical swing-state resident, using the rule of thumb that a household should spend no more than 30% of their income on monthly housing costs.

A household earning the median swing-state income ($79,155) would spend 32.8% of their earnings to afford the typical home; back in 2020, that same household would have had to spend a much smaller share of their income (21.8%) on the typical home.

The affordability trajectory in red states has been very similar to that of swing states. A household earning the median red-state income would spend 32.9% of their income on the median-priced home, up from 21.4% in 2020. In blue states, a household earning the median income would spend 41.3% of their income on the median-priced home, up from 28.6% in 2020.

A swing-state family must earn $86,421 if they want to spend no more than 30% of their income on payments for the median-priced home. That’s nearly double the $45,140 they needed to earn in 2020.

Just one-third of swing-state listings are affordable to the typical family, down from two-thirds in 2020

To look at affordability another way, just over one-third (35.1%) of all homes listed for sale in swing states so far this year were affordable to a household earning the median income, down from two-thirds (65.5%) in 2020.

In red states, just over one-third (36.6%) of listings are affordable on the median income, down from 69% in 2020. In blue states, just one-quarter (25.2%) of homes are affordable on the median income, down from half (50%) in 2020.

Housing affordability is a major factor in this year’s presidential election

More than nine in 10 adult Gen Zers say housing affordability is important when deciding who to vote for in the upcoming presidential election, making it a top issue for voters of that generation, according to a Redfin-commissioned survey fielded in February. While several other topics have since risen to the forefront of election news—including President Biden’s age, an assassination attempt at a rally for Donald Trump and the announcement of Trump’s running mate—housing affordability is a mainstay in politics because it directly impacts nearly everyone in the country.

“Voters in swing states care about housing affordability because soaring home prices and mortgage rates, along with a shortage of homes for sale, have made homeownership feel impossible for some Americans. That’s especially true for young people who are earning low incomes and haven’t yet built up their savings, making them feel it would be an uphill battle to reach their parents’ level of financial success,” said Redfin Senior Economist Elijah de la Campa. “While swing states have historically had lower housing costs than blue states—and most still do—markets in swing states have not been immune to the affordability crunch the country has been facing for the last several years. The inability to afford a home is making a lot of voters feel bad about the economy and their financial prospects.”

The flip slide of rising housing costs is that it also means home values are rising, which is a boon to homeowners’ pocketbooks. The average U.S. homeowner has seen their home’s value increase significantly over the last several years, which means many of them are holding a lot of wealth via housing equity. Still, at least 80% of millennials, Gen Xers and baby boomers—who are more likely than younger Americans to own a home—said housing affordability will factor into their vote in the upcoming presidential election. That’s partly because some people who already own homes would like to move up to a bigger or better home, but are unable to do so because the increase in housing costs has outpaced the increase in their equity, and because mortgage rates have risen so much they’re reluctant to give up their low rate.

President Biden has released a plan to lower housing costs. Donald Trump has said he has a strategy to combat the expensive housing market.

Homes have become unaffordable in swing states—and red and blue states—because housing costs have increased faster than incomes

Housing costs have skyrocketed faster than incomes mostly because of the pandemic-fueled homebuying frenzy: Remote work and ultra-low mortgage rates in 2020 and 2021 drove up demand, which pushed up prices. Homebuying demand was especially strong in Sun Belt swing states at the height of the pandemic: Phoenix, Atlanta, Las Vegas and Charlotte, NC, were all among the 10 U.S. metros that gained the most residents in 2021.

Now, high mortgage rates and a shortage of homes for sale are driving up costs even more.

Typical Black family would have to spend half of their income to afford a home in swing states

It’s more difficult for Black and Hispanic families to afford homes in swing states than it is for white and Asian families.

A family earning the median swing-state income for Black households would spend nearly half (48.2%) of their earnings to afford the typical home; back in 2020, that same household would have spent 32.7% on the typical home. The typical Hispanic family in a swing state would spend 38.3% of their income on the median-priced home, up from 26.8% in 2020.

The typical home is affordable to median-earning white families in swing states, but just barely: They’d spend 29.8% of their earnings on a home, up from 19.8% in 2020. Asian families would spend 24.8% of their income, up from 16.7% in 2020.

Housing costs also increased substantially between the 2016 and 2020 elections

This isn’t the first time housing affordability has been an issue in a faceoff between Biden and Trump. Home prices had already soared in advance of the 2020 presidential election, partly because the pandemic housing boom had already begun.

The median home price in swing states increased 40% from 2016 to 2020. It increased by 27% in blue states, and 28% in red states.

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/swing-state-housing-affordability-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716725548/en/

Redfin Journalist Services:

Angela Cherry

press@redfin.com

Source: Redfin

FAQ

How much has the median monthly housing payment increased in swing states since 2020 for RDFN?

According to Redfin (RDFN), the median monthly housing payment for homebuyers in swing states has increased by 92%, nearly doubling from 2020 to 2024, reaching an all-time high of $2,161.

What percentage of homes in swing states are affordable to median-income households in 2024 for RDFN?

Redfin (RDFN) reports that only 35.1% of homes listed for sale in swing states in 2024 are affordable to households earning the median income, down from 65.5% in 2020.

How much has the median home-sale price increased in swing states since 2020 according to RDFN?

Redfin (RDFN) data shows that the median home-sale price in swing states has increased by nearly 40% since 2020, reaching a record high of $316,063 in 2024.

What income is needed to afford the median-priced home in swing states in 2024 for RDFN?

According to Redfin (RDFN), a swing-state family must earn $86,421 in 2024 to spend no more than 30% of their income on payments for the median-priced home, nearly double the $45,140 needed in 2020.