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- The US real-estate market is neck-deep in an affordability crisis.
- GOP VP candidate JD Vance blamed migrants for America's higher housing costs in a Tuesday interview.
- But experts say it really comes down to a severe lack of housing inventory.
Four years after the pandemic-era housing boom, the real-estate market continues to face instability.
With ongoing affordability challenges exacerbated by high interest rates and inflated home values, housing is a major concern for Americans across the political spectrum.
In a Tuesday interview with Fox News, Republican vice presidential candidate JD Vance shared his perspective on the root causes of the nation's high home prices and rents.
"When I talk to Americans, one of the biggest concerns I hear is, 'Why are housing costs so high?' I'll give you two reasons: First, there are 20 million illegal aliens who shouldn't be here and who are competing with Americans for scarce homes," Vance told Fox News host Sean Hannity, adding, "Second, Kamala Harris has supported higher interest rates, which makes mortgages unaffordable for most people."
Daryl Fairweather, chief economist at real-estate listings and research site Redfin, disagrees.
"The reason housing costs are so high is straightforward, a lack of supply," Fairweather said in a post on X, formerly Twitter, replying to a user who shared a clip of Vance's interview. "I wish pundits would get to the point and ask candidates, 'How do you plan to increase the supply of housing?'"
Housing experts overwhelmingly agree with Fairweather's assessment.
The US is facing a severe housing shortage years in the making that has driven up rents and home prices. Home prices soared more than 40% across the US between the end of 2019 and mid-2021, long before the Federal Reserve began hiking interest rates in 2022.
In the aftermath of the 2008 financial crisis and the housing market crash, the construction of new homes plummeted and hasn't kept pace with demand.
Further, restrictive land-use policies dominate American communities. These policies include single-family zoning laws that generally ban anything other than traditional unattached houses, including townhomes and apartment buildings that could house more people. They're a huge part of why more — and denser — housing isn't getting built.
According to research firm Ned Davis Research, the US is short of 2.2 million homes, while Zillow estimates the shortage is closer to 4.5 million homes.
The situation is aggravated by a mortgage rate lock-in effect, which is causing existing homeowners to hold onto their properties instead of selling them. There's also a slowdown in homebuilding.
Without enough new inventory hitting the market, home prices will likely remain elevated for the foreseeable future.
Vance and Trump's solution to high home costs: mass deportation
Vance's comments on Fox News weren't the first time he's linked immigration and housing.
In June, Vance posted a message on X responding to the allegation that conservatives have few plans to address rising housing costs. The senator argued that deporting millions of immigrants would bring prices down by reducing demand for housing.
"Not having 20 million illegal aliens who need to be housed (often at public expense) will absolutely make housing more affordable for American citizens," Vance wrote.
The senator, who hadn't yet been selected as former President Donald Trump's running mate, was echoing the Trump campaign's promise to deport between 15 and 20 million people, in part to address the nation's housing affordability crisis.
In the past, Vance has blamed the housing affordability crisis largely on high interest rates.
"The thing about the affordable housing crisis is, it is fundamentally a function of higher rents, higher mortgage payments, which are dependent on interest rates," he told Business Insider last year.
Many economists disagree with Vance's argument about the source of the housing affordability crisis and his solution to it.
Deporting millions of people and restricting new immigration could actually slow the pace of new housing construction by reducing the immigrant labor force that makes up a disproportionate portion of construction workers.
Reducing immigration — in addition to other Republican-proposed economic policies like imposing new tariffs and cutting taxes — would likely increase the cost of housing and a slew of other goods, many economists say.
Still, many Republican leaders, including Trump and Vance, have repeatedly blamed the Biden administration, including Harris, for high inflation, despite strong evidence that the pandemic and Russia's war in Ukraine are major causes of elevated prices.
They've also blamed the current administration for relatively high interest rates, which are determined by the independent Federal Reserve and designed to control inflation.