Young voters struggle to afford housing, don’t expect politicians to help

ALLENTOWN, Pa. — Mortgage rates are climbing sharply, home prices continue to gain and inflation in the broader economy is hitting consumers, leading housing affordability to weigh heavily on both renters and potential homebuyers.

In Pennsylvania — a swing state where House races could help decide control of the next U.S. Congress — renting or owning a home is cheaper than the national average, but the share of income needed to do either has also risen along with the rest of the country. In 2019, it took 20% of the median income to rent a home and 18% to own. Today it’s 22% and 24%, respectively, according to Cotality.

“For that person trying to get an apartment, person moving from an apartment to a starter home, starter home to a larger home, each and every one of those cohorts is reporting that it’s a challenge right now, and it’s something that is weighing on them in a very important political place,” Lehigh University political science professor Christopher Borick said.

Americans, especially renters, feel financially stretched by housing costs, according to a new CNBC and SurveyMonkey Quarterly Money Survey, released Oct. 5. It found one in five Americans who rent or have a mortgage spend at least half of their pre-tax income on housing, while 49% spend between 25% and 49%. Standard guidelines from banks and lenders say consumers should spend 28% to 30% of their income on housing.

The cost of housing is now the top political issue — even higher than the cost of food or protecting democracy — among U.S. voters aged 18 to 34, according to the most recent CNBC All-America Economic survey.

Going into the midterm election, the average rate on the popular 30-year fixed mortgage has jumped well over 7.5%, according to Mortgage News Daily. It hit a low of 5.99% days before the war with Iran started. For buyers of a median-priced home of around $450,000, that means an increase of roughly $300 in the monthly payment since earlier this year.

Home prices, while cooling from their big gains in the first years of the Covid pandemic, were still up 1.8% in August year over year, according to the latest read from Cotality. Home prices are up close to 60% since the start of the pandemic. Combined with sharply higher mortgage rates, potential buyers are increasingly sidelined. Sales of existing homes in August were down from the year before, coming in at an annualized rate below 4 million.

“This figure of 4 million is about as low as we can go. It tells you there is an extreme affordability problem,” said Norm Miller, a real estate economist and professor emeritus at the University of San Diego’s Knauss School of Business.

The share of median income needed to rent or buy a home has increased nationwide, with homeownership seeing the biggest leap. In 2019, it took a national average of 24% of the median income to rent and 21% to own, according to Cotality. Today, it takes 26% of the median income to rent…