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Home prices across the United States are near a record high, making the timing of the Biden administration’s new “green” energy mandates, which will add $31,000 to the cost of a new home, particularly challenging. These mandates, being implemented through the Department of Housing and Urban Development (HUD), will not technically apply to all homes but will effectively force all home builders to comply with them.
While the Biden administration acknowledges the higher upfront cost, it argues that the cost will pay itself over time through lower energy bills. However, the breakeven point is 90 years. Therefore, a young couple buying one of these new “green” energy homes and having a child one year later will not see the regulatory costs pay for themselves in their child’s lifetime, let alone theirs.
HUD suggests that homebuilders can offset some of these costs via tax credits from the Inflation Reduction Act, ideally passing these savings along to homebuyers. However, this doesn’t truly reduce costs, it simply shifts them to taxpayers, including those who rent.
This is the latest in a series of failed public policies creating a two-tiered society where many may never afford to own their own homes. Amid a cost-of-living crisis, many renters struggle to pay their rent on time, and over 20% have skipped meals, worked extra hours, or sold personal belongings to stay current on their rent.
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, it’s becoming increasingly difficult for many to save for a down payment. Those who manage to save for a down payment may still not be able to afford the monthly mortgage payment, which has doubled since January 2021.
These new “green” energy mandates will only exacerbate the challenge in the frozen housing market by increasing prices. Inflation has driven construction costs to record highs, with those costs passed to homebuyers in higher prices. Consequently, the supply of new and existing homes has been severely curtailed. Directory indicators like building permits are declining, and the number of job openings in construction fell in March by the biggest drop on record.
The growing demand and low supply will subsequently result in more upward pressure on rent prices. The American people need relief, not more regulation, in their struggle to find affordable housing.
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