Biden Killing the Dream of Homeownership: A Visionary’s Nightmare


President Biden’s Approach is Undermining the Dream of Homeownership!

During a recent speech in Milwaukee, President Joe Biden praised his economic policies, dubbing them “Bidenomics” and claimed that they are “restoring the American dream.” However, one must question the reality of this statement when considering the significant barriers his administration has erected against first-time homeownership, especially for young families.

The American dream has long included the aspiration of homeownership. Yet, two primary factors under Biden’s leadership are making this dream increasingly unattainable for many. Firstly, the surge in inflation coupled with the comparatively sluggish growth of wages and salaries has significantly raised home prices. This inflationary trend benefits existing homeowners by increasing the value of their properties, but the increase is largely attributed to the general inflation, which reached a high of 9% last year, adversely impacting everyone.

Secondly, and perhaps more detrimentally, the steady escalation of mortgage rates has severely hindered first-time homebuyers. Upon Biden’s entry to office, the national mortgage rate stood at 2.9%. It has since soared to 7.1%, a rise largely prompted by the Federal Reserve’s 11 interest rate hikes, a direct consequence of Biden’s extensive spending and borrowing in 2021 and 2022, totaling $6 trillion.

Mortgage company Redfin has reported that the hike in interest rates from 5% to 7% on a 30-year mortgage means that a middle-income family that could previously afford a median-value home of $500,000 can now only afford a home valued at $429,000. This decrease in affordability forces families to settle for less, such as opting for a three-room condo or a townhouse instead of a single-family home. In fact, comparing today’s rates with those during President Donald Trump’s tenure reveals that the average homebuyer can now only afford a house that is over $100,000 less than what they could have three years ago.

Furthermore, if one wishes to purchase a home valued at $500,000 today, their total interest payments would be at least $800 more per month, resulting in an additional $250,000 over 30 years. Compounded with the nearly 20% increase in rent, many young adults in their 20s find themselves relegated to their parents’ basements.

While Biden often speaks of narrowing the economic and racial disparities, it is important to note that the group most adversely affected by these interest rate hikes is minorities, with Black homeownership still below 50%. Although The Washington Post attributes this discrepancy to racism, it fails to consider the detrimental impact of flawed government policies.

Another hurdle to homeownership for Generation X and millennials is their substantial existing debt. With credit card debt at $1.03 trillion and half of all families expected to struggle with monthly repayments, delinquencies are on the rise, which could lead to penalty rates of 20% to 25%. This existing debt crisis raises the question: how can these families possibly secure a mortgage loan of $400,000 or more?

The potential solution of “forgiving” mortgage debt, akin to Biden’s attempted student loan forgiveness, merely shifts the financial burden onto taxpayers and is far from a viable resolution.

The negative repercussions of Biden’s policies on homeownership extend beyond the families priced out of the market; they also affect communities and cities nationwide. Homeownership fosters a sense of civic pride, encouraging homeowners to invest not only in their properties but also in their communities, schools, and public services. This sense of belonging and investment often results in lower crime rates, friendlier neighbors, and rising property values in communities of owners, as opposed to renters.

There is hope that this trend can be reversed, as history has shown. During President Jimmy Carter’s tenure in 1980, mortgage rates reached an astronomical 17%, leading to a voter backlash that ushered in Ronald Reagan. Reagan’s astute fiscal policies resulted in a rapid decline in mortgage rates, proving that the current situation can indeed be rectified with the right approach.

In recent years, the American dream of homeownership has been slipping further out of reach for many young families. President Joe Biden’s policies have only exacerbated this problem, making it even harder for first-time homebuyers to enter the market.

One of the main challenges facing potential homeowners is the rise in home prices due to inflation. While high home prices may benefit current homeowners, it puts a strain on those looking to purchase their first home. Inflation reached a high of 9% last year, making homes more expensive for everyone.

Furthermore, the steady increase in mortgage rates under the Biden administration has made homeownership even more unattainable. When Biden took office, the national mortgage rate was 2.9%. Now, it has skyrocketed to 7.1%, largely due to the Federal Reserve’s 11 interest rate increases prompted by the administration’s massive spending and borrowing spree.

As a result, middle-income families that could once afford a median-value home of $500,000 can now only afford a home worth $429,000. This means that instead of a single-family home, many families are forced to settle for a smaller three-room condo or townhouse. Compared to when Donald Trump was president, the typical homebuyer can now only afford a house that is over $100,000 less in price.

The impact of these policies becomes even more apparent when considering the additional interest payments on a $500,000 home. Today, the total interest payments would be at least $800 more per month, adding up to at least $250,000 over a 30-year mortgage. This significant increase in costs puts a strain on families and leaves many unable to afford their dream home.

Unfortunately, the burden of these interest rate shocks falls heavily on minority communities. Black homeownership remains below 50% for black households, a statistic that is both disheartening and indicative of the systemic barriers they face. While some may attribute this disparity to racism, it is important to acknowledge the role that government policies play in hindering homeownership opportunities for minorities.

Another obstacle to homeownership for younger generations, such as Generation X and millennials, is the burden of existing debt. With credit card debt reaching a staggering $1.03 trillion and half of all families struggling to pay off this debt each month, it becomes increasingly difficult for them to secure a mortgage loan of $400,000 or more.

Given these challenges, it is hard to understand how President Biden can claim his economic policies are successful. Perhaps he has a secret plan to “forgive” trillions of dollars of mortgage debt, similar to his attempts with student loans. However, such a solution would only shift the burden onto taxpayers and fail to address the underlying issues.

The assault on homeownership under the Biden administration not only harms the families that are being priced out of the market but also has negative consequences for communities and cities across the country. Homeownership fosters a sense of civic pride and encourages individuals to invest in their homes, their neighborhoods, and their communities. It leads to lower crime rates, friendlier neighbors, and increased property values.

To reverse this downward spiral, we can look to history for inspiration. In 1980, during Jimmy Carter’s presidency, mortgage rates reached above 17%. Frustrated with the economic turmoil, voters elected Ronald Reagan, who implemented wiser economic fiscal policies. As a result, mortgage rates quickly fell by half and continued to decrease. This shows that change is possible, and with the right leadership and policies, we can create an environment that promotes homeownership and economic prosperity.

As mortgage industry professionals, we have a unique opportunity to advocate for policies that support homeownership and make it accessible for all Americans. By working together, we can ensure that the American dream of homeownership remains within reach for future generations. Let’s be the agents of change and fight for an economy that truly restores the American dream.