June 22, 2024

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Elizabeth Warren on ‘full-blown housing crisis’ targets Jerome Powell’s ‘troubling rate hikes’

2 min read

Senator Elizabeth Warren thinks she knows exactly what will ease—if not fix—what she calls a “full-blown housing crisis.”  Earlier this month, she posted to X, saying, “There are a lot of ways to measure it, but I’ll start with the most basic: We are 7 million units short of what we need to house people. What can we do? Increase the housing supply. It’s plain old Econ 101.”

But more recently, Warren stumbled on a fix separate from the worst housing inventory situation in decades. The Massachusetts senator and three of her counterparts wrote a letter to Federal Reserve Chair Jerome Powell, ahead of the central bank’s meeting this week, expressing concern about “the current state of the housing market and ongoing concerns that high interest rates have aggravated the country’s persistent crisis of housing access and affordability.”

The senators note that mortgage rates reached a more than two-decade high over the past year and argue that it’s a “direct result” of the Fed’s actions. While leaving interest rates unchanged in September and December was welcome, they add, mortgage rates are still too high for families wanting to buy their first homes. Warren and the other lawmakers also suggested that the Fed’s actions resulted in higher rents and reductions in new home and apartment building, apart from simply making it more costly to buy a home. 

“We urge you to consider the effects of your interest rate decisions on the housing market and to reverse the troubling rate hikes that have put affordable housing out of reach for too many,” the senators wrote. 

The average 30-year fixed mortgage rate is 6.88%, which is still significantly higher than the 3% mortgage rates we saw throughout the pandemic, as Warren pointed out in her letter. The senators wrote that the “direct effect of these astronomical rates” was a significant increase in purchasing costs. From December 2021 to December 2022, they said, the average…

Alena Botros

2024-01-30 13:11:43

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