How the housing crunch turned young voters off on the economy

President Joe Biden’s job-approval ratings have sunk across the board, but no group has abandoned him more strikingly than the young adults who helped propel him to the White House.

While these voters are frustrated by Washington’s slow action on climate change and student debt, there's another, often overlooked reason for their growing pessimism: The surging cost of housing has hit them harder than anyone else.

The combination of record-high home prices and escalating mortgage costs — rates have nearly doubled in the last seven months — threatens to price a generation of would-be buyers out of the market, cratering home sales. Fueling the problem are rapidly rising rents that are further limiting young adults’ ability to save for down payments on their first home.

With the Federal Reserve hiking interest rates again last week, Congress struggling to come up with remedies, and the Biden administration failing to solve a severe housing shortage, the effects of today’s housing market could shape millennials' and other young people's finances for years.

“Young people are pissed off,” said Antonio Arellano of the liberal youth-vote organizer NextGen America, which targets voters between 18 and 35. “Skyrocketing rents and house prices are especially hard on young people, who are already buried under student debt.” And the cost of housing is a “key voting motivator for the young voters we’re talking to.”

Median house prices hit another record high in June. Pending home sales fell by 8.6 percent from May and were down 20 percent compared to June 2021, the National Association of Realtors said last week. And the average monthly mortgage payment is 76 percent higher than it was a year ago.

Washington is taking notice: Congress held three hearings addressing housing affordability in one week alone last month, and the Biden administration last week offered state and local governments more flexibility to use federal Covid relief money to boost the supply of affordable housing. But there’s scant cause for optimism among millennials feeling the crunch now.

“A supply-side intervention, even if it were to be successful, does nothing to alleviate that pain right now and does nothing to alleviate the pain of the American people before November,” said housing organizer Tara Raghuveer.

Raghuveer, 30, said she has encountered a “generational feeling of loss” among young people in her work as director of both the national Homes Guarantee campaign for People’s Action and KC Tenants in Kansas City.

A Biden administration official said the White House is doing all it can to ease the shortage but said it’s up to lawmakers to pass legislation that would fund major improvements to the housing stock.

While millennial homeownership rates and wealth have risen over the past two years, they still significantly lag behind those of older generations. People born after 1980 accounted for just 6.7 percent of household wealth as of the first quarter of 2022, according to Federal Reserve data, even though adults between the ages of 18 and 42 make up about a third of the U.S. population.

At the root of the problem is the severely inadequate supply of housing to meet demand, a shortfall that experts estimate at 3.8 million homes. And because there’s no quick fix — Biden’s plan to build and preserve just 100,000 affordable homes is expected to take two more years — the situation isn’t likely to improve anytime soon, which could pile on to the troubles for incumbents in November.

While the president’s ratings have suffered among all age groups, young adults have swung from approval to disapproval in much higher numbers, according to several polls published in recent months.

Sixty-four percent of adults between the ages of 30 and 49 disapprove of Biden’s job performance, while just 35 percent approve, according to Pew. Almost the reverse was true in April 2021, near the 100-day mark of his presidency.

Pollsters say no single development has led these voters to sour on Biden, but they note that young people are keenly aware of the economic hurdles facing their age group.

“This generation recognizes that it’s more challenging to launch, to become independent, than for any previous generation,” said John Della Volpe, director of polling at the Harvard Kennedy School Institute of Politics. He pointed to “the cost of housing, the rising cost of goods and student debt” as widely held concerns.

One in four Americans between the ages of 25 and 34 lives in a multigenerational household today, according to Pew. That's up from 9 percent in 1971.

Those who manage to get out of the house are increasingly stuck renting, as homeownership — the most common way Americans build wealth — drifts out of reach.

Eighty-eight percent of adults aged 30 to 49 and 85 percent of those 18 to 29 rate the economy negatively, according to Pew.

“I’ve observed young people mourning a future that was promised to them, that they now know is not just not guaranteed, but is not coming,” Raghuveer said.

Raghuveer, who organized tenant meetings with lawmakers and Biden administration officials in Washington last month, said her main request has been to get Biden to treat housing affordability with more urgency.

“We need the president to talk about rent to the same extent that he’s talking about gas,” she said. “We need the whole administration to take a no-stone-left-unturned strategy to regulating rents — and regulating rents today, not just in five years. In the same way the administration is all hands on deck on gas prices, we need that.”

Young people are skeptical of the government’s ability to make a difference, she said, and “if we don’t see leadership like that, that skepticism just festers.”

Over 76 million adults in the U.S. are between the ages of 26 and 42, according to Census Bureau data, making millennials the largest share of the population. The median age of first-time homebuyers, which typically make up about 40 percent of the market, is 35, according to Zillow.

“The largest generation in history is coming into a market without enough homes,” said Zillow economist Nicole Bachaud. “People are being priced out of the market, particularly first-time buyers who don’t have that equity built up from owning a home.”

“First-time buying should be booming,” said Lawrence Yun, chief economist at the National Association of Realtors. “The reality is the exact opposite — millennials are facing tremendous challenges,” he said. "Typical first-time buyer activity should be closer to 40 percent. Today it’s been essentially trending at 30 percent, some months below that.”

Young people are also seeing their rent bills — the highest monthly expenditure for most households — grow dramatically larger when they renew their leases. The average national rent has risen 14 percent over the last year, according to Apartment List.

“Skyrocketing rents and a shortage of homes for sale are pushing homeownership further out of reach for millions more families — especially younger households and people of color,” said Senate Banking Chair Sherrod Brown (D-Ohio). “If we don’t address the high cost of housing, we could lock in and exacerbate the housing and wealth inequities we have.”

Added Rep. Patrick McHenry of North Carolina, the top Republican on the House Financial Services Committee: “The only way to make housing more affordable is to increase the supply. This starts with reforming state and local regulations that impede the development of new housing.”

The Biden administration released a plan in May to boost supply, in part by rewarding state and local jurisdictions that overhaul exclusionary zoning rules. The White House in September committed to building or preserving 100,000 affordable homes over three years.

Volpe said movement on housing could help Biden’s standing with young voters.

“I don’t think that’s the reason why he is where he is, but it could be a pathway out of where he is, to remedy the specific ways in which the economy is affecting young people uniquely — the lack of affordable housing, student debt, inflation,” he said.

The Biden administration official said that since affordable housing is a problem in every congressional district, U.S. lawmakers should be sharply focused on it because administrative tools aren't enough.

There are more than a dozen bills circulating in Congress aimed at making housing more plentiful or affordable. The $1.75 trillion reconciliation bill the House passed last fall included billions of dollars for the construction and rehabilitation of affordable homes, but those programs aren’t expected to make any final package that could clear the Senate.

House Democratic appropriators in July approved a funding bill for the Department of Housing and Urban Development that includes money for 140,000 additional rental assistance vouchers and funding for a program to help first-time, first-generation buyers purchase a home.

Still, said Yun: “Any increases in available inventory observed over the first half of this year have been offset by corresponding increases in consumer costs.”