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President Biden's new housing initiative includes tax credits and plans to build more than 2 million new homes. That's great, but at this rate, the only 'new home' most of us can afford is the box our last online order came in. 'Honey, I found our summer home! It's got a lovely view of the recycling bin.'

During President Joe Biden's State of the Union address, a notable focus was placed on housing amidst political tension and looming elections. Amidst discussions on the economy, healthcare, and pharmaceutical prices, Biden shifted gears to address the housing crisis, acknowledging the pivotal role of housing costs in Americans' lives.

He proposed a housing tax credit to provide homeowners financial relief in response to these concerns. Specifically, the President unveiled a plan to offer Americans a $400 monthly tax credit for two years to assist with mortgage payments for first-time home buyers or those seeking to upgrade their homes. Additionally, Biden proposed reducing financial burdens by eliminating title insurance requirements on federally-backed mortgages for refinancing, promising substantial savings for homeowners.

The President also took a firm stance on issues affecting renters, announcing measures to combat what he called exploitative practices by large landlords and price fixing while easing federal financing regulations to spur the construction of new housing units.

With a record 1.7M new housing units already in the pipeline, the administration's ambition to construct and renovate 2 million affordable homes aims to alleviate the rent crisis. While the Democrats strongly supported Biden's housing initiatives, the Republicans' response was more reserved, reflecting the deep-seated partisan divides.

However, with housing emerging as a critical issue for the electorate and the election rapidly approaching, Biden's proposals signify a concerted effort to address Americans' urgent housing needs, setting the stage for potential legislative battles and policy shifts that could have lasting implications for the real estate sector.

Why does this matter? More than ever, voters are watching the housing market, dramatically impacting their voting intentions. According to a new survey from Redfin, over half (53.2%) of U.S. homeowners and renters consider housing affordability a significant factor influencing their choice in the upcoming presidential election. This highlights its impact on their perception of the economy, with nearly two-thirds (64.2%) feeling negative about the economic situation due to high mortgage rates, home prices, and a severe housing shortage.

Redfin Chief Economist Daryl Fairweather notes that, despite a seemingly strong economy, the challenge of affording desirable housing leaves many Americans stuck and unable to progress with life plans. In response, President Biden has introduced initiatives to improve housing affordability, including tax credits for first-time buyers and the construction of over 2 million new homes, aiming to make the dream of homeownership more accessible.

Staying Put: 78% of older American homeowners choose to age in place, significantly impacting the real estate market by exacerbating the housing shortage. This trend sees a stark reduction in homes for sale, with only a fraction considering moves to 55+ communities or living with relatives. This choice by the baby boomer generation underscores a preference for familiarity over traditional retirement moves, marking a pivotal change in housing dynamics. (Redfin)

Landlord Lashing: President Biden visited Nevada last week, targeting corporate landlords for high rents despite easing inflation. He aims to shift the blame for high living costs from his administration to corporations with pricing power. Housing is a major concern, ranked second in a recent survey of registered voters. Biden called on Congress to pass legislation to lower housing costs. A recent poll showed 63% of respondents blamed "large corporations taking advantage of inflation" for price increases, up 9% from November. (CNBC)

WTF is Stagflation: Strategists from the Bank of America and JPMorgan Chase have raised concerns about the possibility of stagflation in the US economy, defined as growth below 2% and inflation between 3% and 4%. Recent economic reports support these concerns, with the February Consumer Price Index coming in at a higher-than-expected 3.2% year over year and retail sales rising 0.6% from January to February, falling short of the projected 0.8% growth. However, more than two-thirds of academic economists polled by the Financial Times believe that the Federal Reserve will be forced to hold interest rates at a high level for longer than anticipated, with the most popular response for the timing of the first cut split between July and September. (Globe St)

20%: In the first quarter of 2024, the U.S. office market experienced a record high vacancy rate of 19.8%, according to Moody’s Analytics, surpassing previous highs from 1986 and 1991 and indicating a persistent challenge within the office sector. This represents a slight uptick from the 19.6% vacancy rate recorded in the final quarter of 2023. Yet, Moody’s identifies several positive economic indicators that may offer stability to the commercial real estate market amidst these trends. (Moody’s)

6.9%: ATTOM's 2023 analysis of property taxes across 89.4 million U.S. single-family homes reveals a significant $363.3 billion was levied in property taxes, marking a 6.9% increase from $339.8 billion in 2022—nearly double the previous year's growth and the largest rise in five years. Concurrently, the average property tax for single-family homes grew to $4,062, a 4.1% increase, resulting in an effective tax rate of 0.87%, the first uptick since 2017. (ATTOM)

25%: Commercial real estate professionals are less concerned about the industry and market fundamentals and are more willing to invest than last year, according to a survey by Altus Group. The survey found that 25% of CRE executives plan to focus on deploying capital over the next six months, compared to just 7% in Q4 2023. While 41% of respondents believe all property types are overpriced, this is down from 63% in Q4 2023. The survey also found that 42% of respondents manage existing assets and hold off on new investments, down from 57% in the previous quarter. (Bisnow)