President Joe Biden’s latest policy proposals could jack up home prices even higher following high inflation and excessive government spending, economists told the Daily Caller News Foundation.
Home prices surged to an all-time high in the latest data from March, up 6.5% across the country and 8.2% in the 10 largest cities in the U.S. compared to last year. Biden’s newest policy proposals of subsidizing housing would continue to fuel rapidly rising home prices that have been exacerbated by huge government spending under his administration, according to economists who spoke to the DCNF.
“Subsidies of every sort distort market prices, discourage private investment, and result in misallocated resources,” Peter Earle, economist at the American Institute for Economic Research, told the DCNF. “On top of that, if the Biden housing assistance proposals go through without addressing the other sources of high prices — massive federal spending and crowding-out effects — it will result in little more than further price dislocations and misused resources — with a fresh layer of bureaucracy to boot.”
Biden has attempted to create incentives for Americans to buy homes despite a shortage, reaffirming his call on Thursday for Congress to give a $5,000 annual tax credit for two years to first-time home buyers to offset mortgage costs. The White House claims that the subsidy would offset mortgage rates by “more than 1.5 percentage points” and increase the number of families buying homes by 3.5 million, according to a White House fact sheet.
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