Home prices across the nation are back upnear a record high. That makes this a particularly bad time for the Biden administration to have rolled out its new “green” energymandates, which will add $31,000 to the cost of a new home.
Themandatesare being pushed through the Department ofHousingand Urban Development (HUD) and while they technically won’t apply to all homes, all home builders will effectively be forced to comply with them.
The Biden administration doesn’t deny this higher upfront cost. It simply claims it’ll pay for itself via lower energy bills. Unfortunately, the breakeven point is 90 years.
Failed public policies are creating a two-tiered society in this country, where an entire generation of Americans will likely never be able to afford their own homes. (AP Photo/Gene J. Puskar, File)
So if a young couple buysone of these new “green” energy homes and has a childone year later, the regulatory costs still won’t have paid for themselves in that child’s lifetime, let alone the life of the couple who bought the home.
WHEN PRIVATE PROPERTY IS TAKEN BY SQUATTERS, ALL OF SOCIETY PAYS A PRICE
HUD argues that homebuilders will be able to get tax credits, via the Inflation Reduction Act, to offset some of these costs, with those savings hopefully passed along to homebuyers. However, this is not a real reduction in costs; it’s merely passing the buck to taxpayers. Instead of a homebuyer bearing the full freight of these “green” energymandates, some of the cost will be passedonto taxpayers, including renters.
This is just the latest example of how failed public policies are creating a two-tiered society in this country, where an entire generation of Americans will likely never be able to afford their own homes.
VideoAmid a cost-of-living crisis, renters today are paying more than ever inhousingcosts, withhalfof them reporting difficulty paying their rentontime. Over 20% did at leastone of the following to stay currentontheir rent: skipped meals, worked extra hours, sold personal belongings.
SUPREME COURT CAN FIX THE HOMELESS CRISIS THAT THE GOVERNMENT CAUSED
With the average monthly rent for a home up 50% in just four years and the cost of other necessities like food, clothing and energy also skyrocketing, many Americans have nothing left to save at the end of the month. Small wonder the average savings rate today is less than half what it was before the pandemic.
That means many renters can never afford to save for a down payment, so they’re stuck renting forever.
VideoEven those who manage to scrimp and save for their jumbo-sized down payment still may not be able to afford the monthly mortgage payment, which has doubled since January 2021. Despite record high rental prices, owning a home has never been so expensive relative to rents.
The fallout from people being unable to afford a home goes far beyond dollars and cents. Young people delay marriage and having children. A two-tiered society springs up between the “haves,” who were lucky enough to buy a home at the right time, and the “have nots,” who were too late. Americans become increasingly divided along racial lines. People lose hope.
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These new “green” energymandateswill worsen conditions in the frozenhousingmarket for the same reason that other failed public policy caused the mess in the first place: they increase prices.
VideoRunaway government spending caused 40-year-high inflation that drove up prices everywhere, including forhousing. Inflation also necessitated higher interest rates, which have made it impossible for many people to sell their homes since that would mean losing a 2-3% mortgage in exchange for a 7-8%one.
Inflation has also driven construction costs to record highs, and those costs are passed to homebuyers in the form of higher prices. Since most people cannot afford a home at these higher prices, homebuilders are producing fewer houses.
Thus, the supply of new and existing homes has been severely curtailed. The growth in apartment buildings will likely fall sharply and soon, too. Forward-looking indicators like building permits are declining and the number of job openings in construction fell in March by the biggest droponrecord. Less construction of apartments will mean even more upward pressureonrent prices.
Americans need relief, not regulation, in their struggle to find affordablehousing.
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E. J. Antoni is a research fellow for regional economics in The Heritage Foundation’s Center for Data Analysis and a senior fellow at Committee to Unleash Prosperity.
