2021 housing market, politics, if that doesn't just stir a fire of anxiety in you, I don't know went well. So now, let's break down the Biden administration's proposed housing plan and how this could affect home affordability. That means directly affecting how much you and your family might be able to purchase how easy or difficult it is for you to get into a home and the shape of the overall economy.
So let's first dive into this huge issue that so many people are facing. This is the fact that the average age earner in America can't afford to buy a home in 71% of the United States. This is a huge affordability issue that so many people are running into in this COVID market has extended and made that even more difficult to purchase because we're seeing such low inventory in such high demand, that prices are skyrocketing.
We also have to keep in mind that the president, no matter who it is, doesn't directly affect housing. It doesn't directly affect affordability. However, they can push policies that begin to change the dynamics with housing and the economy, and the affordability of homes.
So the Biden administration has proposed a $640 billion plan over the next 10 years. This is a comprehensive housing plan. That's going to include a couple of different facets of housing that can directly affect affordability.
Keep in mind, this is a wish list. So first the Biden administration has to come into the office. Then they have to create this bill. Then it has to get passed through Congress for it to even get enacted. So right now this is just a proposal on behalf of the Biden administration. So before we talk about the actual proposal with the Biden administration, let's dive into a word from our sponsor.
Within just a few minutes. If you want to check the rates that you're pre-qualified for right now, you can go to Credible. There are mortgage comparison websites. They'll do a soft credit pull. Go fill out a little bit of information and they'll show you rates from different lenders. So you can get an idea of what you qualify for right now, along with all the costs and full transparency upfront.
So let's talk about Biden's proposed housing plan that they have set up first. They want to expand the Section 8 Housing Program for low-income households.
They also want to remove discriminatory policies, and these are policies that are currently ongoing and local governments. And what the administration would do is inject money to. Improve the testing that they have in these governments to make sure that there aren't discriminatory practices going on, otherwise, they could penalize or withhold federal aid.
So right now, single-family zoning artificially increases the price of land and homes because it makes those more scarce because simply just because of the zoning.
Also, provide a tax credit for people spending more than 30% of their income on housing.
They're also focusing on building restoring housing and low-income areas in communities suffering from the affordability crisis.
Finally, this one, this is huge. I was stunned when I heard this. So it would target unfair property appraisals, which currently value black-owned homes at tens of thousands, less than comparable white-owned homes.
So on average black-owned homes have a 23%, less valuation, and appraisals than white-owned homes. This is ridiculous. The fact that this is ongoing and this is creating an affordability crisis all over this actually creates more systemic elements of racial injustice. And this is actually a study done by the metropolitan policy program at the Brookings Institute.
So all of these things are ways that the Biden administration wants to tackle home affordability. Now, obviously, you can see that home affordability is not something that can just be changed overnight. It has to be kind of tackled from multiple angles. So if we have affordability. We can't just immediately change it.
We have to come in from this angle, this angle of discriminatory practices, this angle of, economic health, this element of, appraisals. We have to attack it from different sides to actually see significant change.
So now let's actually analyze this from a factual perspective. First outside of Biden, we still have a COVID issue. No matter what happens with the next presidential administration COVID is not going to go away just because a new person comes into office. COVID is causing huge issues in the market but the biggest thing that we have is uncertainty economically, especially from a jobs perspective and we have incredibly low inventory that's driving up costs.
Also historically election years, see prices rise more slowly, but this one is actually a little bit different because we're seeing such low inventory. That's increasing those cars. We're also seeing uncertainty from a turbulent political climate. And what that's going to cause is, is so much uncertainty and unknown coming into the next year on what will actually happen with affordability.
Then housing will generally remain unaffected by the Biden administration unless a housing bill can actually pass Congress. Again, this goes back to the idea that the president themselves, the administration themselves can not directly. Housing affordability or the housing market in general and the presidency doesn't affect the housing market.
As much as it would the stock market, the stock market racks, things much more quickly, much more viscerally based on emotion than the housing market. The housing market takes a lot longer to catch up to those trends. So we won't see a huge change immediately in affordability, just from the transition of a new administration.
Housing predominantly is going to be affected by these three things.
The unemployment crisis is causing so much uncertainty with what's going to end up happening over these next few months. Is there going to be a vaccine? Will that cause a reduction in COVID cases, is that going to help people get back to normal employment.
Also, there's a severe lack of inventory, largely caused by the fact that, builder growth is slow. There's so much uncertainty that people don't want to sell their homes, especially because the market is, is as difficult as it is. Sellers don't want to sell because they know it's going to be difficult for them to purchase. So they don't sell, which continues a cycle of making it more and more difficult.
So we don't know what's going to happen in the next few months with our economy. For instance, is there going to be an extension of the moratorium on foreclosures? If not, then we could see a foreclosure crisis happening. If so many people are getting foreclosed. If so many people are not paying rent, we could see this huge collapse begin to happen. If there isn't support built from underneath.
Most likely what's happening. If you're following so much, that's going on with affordability and the housing market, and the political climate that we're in. It's so easy to get caught up in the news cycle of everything that's going on. And often what ends up happening is we tend to overthink things that are happening. We tend to ruminate, and then we have this tribal fear where we feel like we have to tightly grasp on our political ideas and our beliefs and what we want to happen in the future.
This is actually a defense tactic to keep us from an inhibitory emotion that's anxiety and underneath all of that anxiety tends to be this fear of the unknown. Because we're not actually all out here fighting each other with seems like to the endless death on Facebook and we're other social media platforms for our specific political party or a specific idea of what's happening in the market.
What we're really fighting for is are we going to be okay over the next 12 months? Is our family going to be okay? Are we going to be able to afford a place to live? Do we feel like we're being cheated out of a home? That's the fear that we need to address. And so when we can first validate that fear that's happening inside of us, instead of just reverting back to these defenses, that's when we can start to see some relief, start to see some actual change and progress being made, start to feel like we're actually more connected to the people around us than we may be anticipated, to begin with.
The first thing to do is to validate that fear that's going on. It's perfectly okay to say I'm actually really afraid of what's going to happen over these next 12 months, whether I'm on board with the byte administration, or I'm not on board with the byte administration. It's okay to have that fear. It's okay to have the fear of saying, I don't know what's going to happen with COVID right.
Everything is as granular as, I don't know if I'm going to be able to find employment with the next three months. To as vague as I'm really just concerned about what's going to happen in the world with this pandemic. But when we can recognize that fear actually field in our body and validate it, that's when we can actually use that as a platform to see growth happen on the other side.
So I want you to take a moment step outside of these defenses that you might be having. And be able to go a little bit intrinsically and see what's happening inside of me. What are these things that I'm feeling? What are the things that I'm really feeling? Because that's going to lead you into an open-hearted state, a state where you're calm, you're curious or connected to other people. That's when you're going to make better decisions. That's when you're going to find more fulfillment.
If we stick in these defenses and we stick in this anxiety, we're always going to feel overwhelmed. We're always going to feel taken advantage of, and we're always going to have to feel like we're fighting each other for survival. Take a moment to take a deep breath to feel what's really going on underneath. That's going to lead you to a better place.
Now let's talk about opinion and again, keep in mind, this is opinion just based on this data. So, what we first have to understand is currently with the Trump administration, there's been some instability with key figures in that administration and what some people would call like a revolving door of secretaries and appointees.
We've seen a lot of people come and go in the Trump administration. People have sentiment, not everybody obviously, but some people have the sentiment that the Biden administration could provide more stability. Now, this would be beneficial for the housing market to be able to see more solid growth, more continuity with these programs that are being enacted.
The people would also see sentiments of the white house, more likely to support urban recovery. And what this would do is create a psychological floor of sorts that would support the bottom of the housing market. This is what John Walkup calls, the Biden Bump.
So basically what's happening here is, is there's a psychological element going in with the housing market and what some people are suggesting is that it's possible that the transition to the Biden administration could provide some support in the housing market that would make people feel a little bit more comfortable, feel a little bit more stable.
Then the market reaction will most likely be a decline in the stock market, which isn't a picture of the market as a whole. So the main reason why we might see a decline in the stock market is normally when you have an administration come in, that's not as this might not be fair to say.
Economically forward as maybe a Republican administration might be. Then what ends up happening is normally the stock market's going to react out of fear. So we might see a decline in the stock market. Well, we have to keep in mind that the stock market is not the housing market. The stock market is not a picture of our economy as a whole. We have to keep that in mind.
Also, we need to understand that when we see that transition happen and the potential for the stock market to decline doesn't mean that the housing market is crashing. It doesn't mean that there's a decline in the housing market. Again a presidency most likely is not going to immediately affect the affordability of housing for affordability to be changed by an administrator. This is going to take years for these programs to be enacted and for us to see change happen immediately from these programs.
So housing really, I don't believe is going to change that much. I think we're still going to have so much uncertainty from what's happening with COVID in our economy. So much uncertainty from what's happening with people on unemployment and getting back to normal employment. Then also so much uncertainty with how low inventory is right now. And if demand is going to stay as high as it is with how short we are an inventory.
You can sit tight. It's perfectly okay to sit tight. If you don't feel comfortable making a decision in this market without turbulence.
Maybe what's better for you to do instead of actively shopping for a home and feeling discouraged because you're seeing so many issues with affordability and not being able to put in offers and things being so competitive. It might make sense for you to just take this time and focus on building your savings or paying them off.
Or maybe right now you're in the spot where you don't have employment and you're trying to figure that out as well, while still keeping solid relationships in your life and making sure that those don't dissolve away, even amidst the chaos of everything else. So it's perfectly okay to say, you know what, right now is not the best time for us.
We're going to wait a little bit, hold out. We're going to sit tight and actually be really comfortable in that decision. And it's perfectly okay to validate that with yourself, with your spouse, with a partner, with your family, to say, we're actually going to, we're going to hang tight for a little bit. We think that's the best choice.
Otherwise, that anxiety continues to eat away at us the entire time. And we feel like we weren't sure if we made a good decision or not.