In a lengthy speech at the Republican National Convention (RNC) in July, former President Donald Trump highlighted the US housing crisis but exaggerated several statistics. He aimed to spotlight incumbent President Joe Biden's alleged failings, linking rising housing costs directly to inflation.

Realtor.com® senior economist Ralph McLaughlin expressed appreciation for including housing in political discussions, but the accuracy of Trump's statements leaves much to be scrutinized. Here's what you need to know:

Housing Market Crisis: Fact-Checking Trump's Claims Against Biden

The Real Picture of Inflation and Housing Costs

Inflation's Impact

Trump's claim: “Groceries are up 57%, gasoline is up 60-70%, mortgage rates have quadrupled, and total household costs have increased an average of $28,000 per family under this administration.”

Fact Check:

• Grocery Prices: Up 21% since January 2021 (Labor Department).
• Gasoline Prices: Up 35% since January 2021 (Labor Department).
• Mortgage Rates: More than doubled but have not quadrupled.
• Household Costs: Average expenditures increased by $11,635 from 2020 to 2022, not $28,000.

While Trump's figures are overstated, they underscore the real pain many consumers feel due to inflation.

Mortgage Rates and Home Affordability

• Current Average Mortgage Rate: 6.77% (Freddie Mac).
• Record Low in Early 2021: 2.65% (Freddie Mac).
• Peak Rate in Last Fall: Nearly 7.8%.

Although the rise in mortgage rates has been dramatic, it is not as severe as Trump claimed. The Federal Reserve's decision to raise its benchmark rate to combat inflation has led to significant increases in monthly payments for new homebuyers.

Home Prices and Affordability:

• National Home Price Increase (Past 5 Years): 54% (Case-Schiller Home Price Index).
• Home Affordability: At its lowest in four decades (Realtor.com analysis).

Household Expenses and Financing

Household Expenses:

• Average Annual Household Expenditures: Increased by $11,635 from 2020 to 2022 (Labor Department).
• Trump’s Claim: $28,000 increase, unsupported by data.

Trump's figures do not align with published data. The actual increase in household expenditures has been significant but far short of the claimed $28,000.

Republican Party's 2024 Platform on Housing

The Republican Party lists “housing affordability” first in their 2024 platform, proposing several measures:

• Reducing Mortgage Rates: Through inflation reduction.
• Opening Federal Lands: For new home construction.
• Tax Incentives: To promote homeownership.
• Cutting Regulations: These increase housing costs.

Young People and Home Financing

Trump's Claim: “Young people can’t get any financing to buy a house.”

Reality Check:

• Lending Standards: Remain largely unchanged for conforming mortgages (Fed's quarterly survey).
• Homeownership Rate (Under 35): Higher now than pre-pandemic levels.

The under-35 homeownership rate has been trending down since its 2020 peak, yet it remains above pre-pandemic levels at 37.7%. While high prices and interest rates pose challenges, the data does not support the claim that young people cannot get financing.

Conclusion and Future Outlook

Despite Trump's exaggerations, the issues he highlighted remain pressing concerns for many Americans. The housing market and inflation continue to be significant topics as we approach the 2024 election. As the Federal Reserve considers potential rate cuts, the future of mortgage rates and overall housing affordability remains uncertain.

 

Stay Tuned: For more detailed analysis and updates on this topic, follow our real estate blog. The discussion around housing and homeownership is sure to remain a critical issue in the upcoming election season.