Why Biden’s Policies Are a Nightmare for Housing Affordability

Today, more than two-thirds of American households can’t afford shelter. Brandon Smith of offers an easy but politically-incorrect fix to the current housing crisis, then warns us of what’s likely to happen instead…

Why Biden Policies Are a Nightmare for Housing Affordability
Photo by Roselyn Tirado

From Brandon Smith

We’re enduring a stagflationary crisis – there's no way around it.

It doesn't matter how much oil Joe Biden dumps on the market from the Strategic Reserves.

It doesn't matter how many jobs he is able to temporarily buy with $8 trillion-plus deficit spending.

It doesn't matter how many times the mainstream media claims we are “in a recovery” or claim to see the “green shoots” of a “soft landing.”

In reality, most Americans are struggling to afford necessities – increasingly, they’re simply unable to participate in essential markets. The longer this goes on, the deeper the hole and the harder it will be for people to climb out.

This is how economic disasters work

For most people, it feels like they wake up one morning at the bottom of a pit, barely able to see the sun, wondering what happened. Everything was going just fine yesterday – how’d we end up here?

For those who pay attention, we can watch the pit get deeper, a shovelful at a time…
Granted, we have seen worse conditions in the U.S. in the past. Both the Great Depression and the stagflation crisis of the 1970s were truly severe.

The people who think conditions are bad now haven't seen anything yet (interest rates eventually climbed to 20% in the early 1980s). That said, there is a growing potential for today's crisis to become the biggest financial crisis in our nation's history – given a little more time, and just a little more digging.

Part of this ongoing problem is the heavy inflation in housing prices, and make no mistake, this is one of the biggest threats facing middle-class America right now.

Let’s describe the problem, then solve it.

The current state of the housing market

Rental prices on the average American home have climbed to $2,047 per month. Depending on where you live, that might sound outrageous or it might sound like a bargain. Either way, compared to the average in 2019 was $1,465.

That's a 30% increase in rental prices in the span of four years. Know anyone whose take-home pay has risen 30% in those four years?

For apartments, which are generally the lower-end rental option, the average cost today is $1,372 per month, compared to $1,078 per month back in 2019. That’s a 27% monthly price hike on the cheapest form of housing. Know anyone whose take-home pay has risen 27% in the last four years?

We know that no more than 30% of a family’s income should be spent on housing. If it costs more than 30% to keep a roof over your head, you’re considered “overburdened” by housing costs. Spending too much on shelter forces us to make tough choices, economizing where we can, cutting back on other categories of discretionary spending…

Well, the rent-to-income ratio in the U.S. is now 40% – meaning, on average, all households are overburdened.

What’s going on?

The price of the average home has soared. From $313,000 in 2019 to $431,000 today – an astonishing 38% increase. That puts a home far beyond the income of the majority of American households, pricing out more than 67% of the population.

It’s not just a price problem – there's also declining availability across the nation.

Rentals in many areas (outside of crime ridden metro neighborhoods) are awash in applications, so much so that a new scam has developed among some property owners requiring up-front, non-refundable fees just to apply. These “screening fees” can climb into the hundreds of dollars for each applicant, and that’s the price to even be considered. You’re unlikely to get the rental, even if you cough up the fee – but you definitely won’t get the rental if you don’t.

Rentals are available, but it’s a seller’s market and new housing simply can't keep up.

There are claims that this trend will soon reverse and that builders are set to flood the nation with affordable new properties, but I seriously doubt it given current conditions. When it costs about the same to build a luxury multi-million-dollar home or a low-rise multi-tenant building, and the profit on the former is several times the latter, what sane builder would opt for “affordable housing” construction?

Skyrocketing mortgage rates are pusing more and more middle-class families into the rental market – people who would’ve been homeowners a few years ago are now becoming renters. Which makes the supply and affordability problems worse.

So what can be done about this?

I'll rephrase the question: What solutions can be pursued that will have fast results, rather than taking a decade or more with minimal effects? The truth is, the solutions are simple, but they require actions that some people would consider contrary to their political and/or business aims.

Certain interests would do everything in their power to prevent such solutions from being achieved and that's the ultimate obstacle. It's not only that inflation is rampant and prices are high and supply is low, the greatest obstacles are the political groups and corporate cabals that will try to stop basic reforms from happening to alleviate the crisis.

Let’s ignore those concerns for a moment, and focus on solving the problem.

A politically-incorrect guide to ending the housing crisis

First off, these solutions would have to be enforced at the state level, because there is no way under the current federal regime that such measures would ever become national law.

Step one is the most important and would probably get the most opposition...

Step 1: Deport all non-citizens

America is taking on a population explosion that it cannot compensate for while acting as a steam valve for foreign governments to pawn off their problems. You want to know why housing prices are exploding? Because foreigners are sapping the supply. And there’s an obvious solution.

No refugees.

No asylum.

No two-to-three-year period where illegal immigrants are parked in a holding pattern, living off the system. If they didn't migrate here through the proper legal channels, they should be deported to their nation of origin.

If you want to know why rental housing in particular has skyrocketed in the past couple years, it's not only because of inflation in the money supply. There have been more than 2.8 million illegal migrant encounters at the southern U.S. border in 2023 alone. At least 1.5 million of those migrants have been allowed to enter the U.S. by the Biden administration, and the rate of illegal crossings is only increasing with each passing year.

There is an estimated 16.8 million illegal immigrants residing in the U.S. as of 2023, though the real numbers could be much higher. To put this in perspective, only 3 million Gen Z Americans have turned 18 since the year 2000 (and I think it’s safe to assume they’re going to want to live somewhere).

Removing illegal immigrants (who are not supposed to be here in the first place) would greatly relieve the rental market’s supply issues and leave ample options for young Americans. The increased supply would quickly bring down rent prices and perhaps even home purchase prices.

Fixing the problem at the state level would require stepping on the toes of the federal government and enacting immigration enforcement within state borders. Greg Abbot, the governor of Texas is partially doing this by busing migrants out of Texas to Democrat sanctuary cities. The crisis will not be fully averted until illegal migrants are bused out of the U.S. entirely, but booting them out of red states would help and blue states would probably be forced to follow as they suffer under their own foolish sanctuary policies.

Step 2: Stop foreign purchases of U.S. real estate

This is an action that some state governments are already pursuing. More so in the case of preventing the Chinese government and their corporate partners from buying up property, but this should apply to all foreign buyers. (China has already taken this step, along with 28 other nations.)

Just how big a solution would this be? Consider: Roughly 40 million acres of U.S. agricultural land is owned by foreign companies, and foreign buyers purchased over 84,900 homes in the U.S. just in the past year. Yes, higher interest rates are slowing these purchases, but not enough.

States can and should make it illegal for foreign nationals to buy property within their borders. I would suggest a moratorium passed on foreign buyers for at least a decade, if not forever.

I don't think many in the public realize how open our property markets are to foreigners. Back in 1987, Joan Didion described the Miami skyline at night, noting the sheer quantities of dark windows in the high-rise condos – purchased as combination investment and sanctuary by Latin American elites who wanted an overseas bug-out location for the next coup. That was a long time ago, but even today, foreigners own more than 1 in 6 Miami homes.

Just one example of a challenge that ranges from $50-$150 billion per year. Now, in times of prosperity this might not matter as much to some, but in times of inflationary crisis the rules need to be changed to favor Americans first.

And it doesn’t even require another few trillion dollars in federal government spending.

Step 3: Moratorium on corporate home buying

According to data compiled by Pew, corporations owned nearly one quarter of all homes in the U.S. Many disguise themselves as smaller investment groups to muddy the water.

That's 25% of the total housing market controlled by a handful of corporations who can leverage that housing supply shortage into higher profits for themselves nationwide – and, of course, higher rent costs for everyone.

Keep in mind, this is similar to what happened during the Great Depression when major banks bought up distressed property mortgages on the cheap as owners struggled to stay above water. In the end banks were snatching up homes for pennies on the dollar.

It's unlikely that the current federal government would ever place restrictions on these companies, but state governments might, given the level of homelessness that is about to hit their economies in the next few years.

Again, if the primary danger in U.S. housing is lack of supply driving up prices, then we must create more supply to make housing affordable again.

We can't compel the market to build more houses for cheaper, and we can't compel home builders to take a loss. What we can do is free up the existing supply and take it out of the hands of people who shouldn’t own it in the first place, and restrict those groups who are attempting to corner the market.

As practical and sensible as my proposal is, I doubt it will ever happen. Certainly not nationwide, at best in an uncoordinated hodgepodge of state-level policies.

So what will happen instead?

Jerome Powell has a different plan

The Federal Reserve's plan (at least the plan they openly admit to) is completely different – they are actively attempting to crash the economy and cause untold financial harm in order to drive inflation back down. The same way that zero interest rates and trillions in printed money drive prices up (not just prices of food and gas, but of assets like homes), raising interest rates and bleeding liquidity out of the economy makes prices fall.

See, once people lose their jobs, they can’t afford food or gas or rent. Remove demand and prices fall – problem solved!

Yes, it’s the financial equivalent of carpet-bombing which punishes the guilty and the innocent alike. Yes, it will work – by pushing the entire nation into a recession so brutal that the only solution is Federal Reserve intervention… Cue money-printing and interest rate cuts – which sets the stage for the next enormous surge in the cost of living.

Welcome to the modern economic cycle, where your economic well-being is managed by an unelected cabal of academics who’ve never had a real job in their lives. Unfortunately, there’s no way to opt out of this financial manipulation completely, although I think it’s smart to diversify some portion of your savings with tangible, inflation-resistant assets the Federal Reserve can’t control (physical gold and silver). They can’t be hacked or inflated away, and they’re a lot more liquid than other forms of tangible assets like farmland or livestock or fine art.

You may think my proposed cure is worse than the disease. I disagree – that’s fine. What’s more important to understand is the Federal Reserve’s “cure” is worse than the disease, and it isn’t even a real cure! More of a palliative, temporarily easing the pain of the economic decline.

The required dosage to mask the pain gets larger and larger, though – setting the stage for a more precipitous decline next time, guaranteeing more severe and widespread suffering…

It’s smart to insulate yourself and your family from this financial manic-depression as much as you can. We can’t entirely decouple ourselves from the Fed’s economic puppeteering, but we can sever a few of the strings. I think the best way to do that is to diversify with assets like gold and silver – real, tangible metal – whose intrinsic value offers a stable foundation for building a more predictable financial future.

Brandon Smith has been an alternative economic and geopolitical analyst since 2006 and is the founder of

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Birch Gold Group.

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