US Housing Crisis: Is Elon Musk to Blame?

The US housing market is in turmoil, and some are pointing fingers at Elon Musk. His Department of Government Efficiency (D.O.G.E) has put a stop to all housing projects in the US, including a $1 billion program aimed at preserving affordable housing. This decision is part of a larger funding freeze at the US Department of Housing and Urban Development (HUD), according to an internal document reviewed by The Associated Press.

The American Dream of Homeownership in Jeopardy?

A report from Mitrade.com shows that monthly housing costs in the US reached a record high of $3,104 in January. Mortgage payments have doubled in the past five years, now averaging $2,237 per month, with property taxes and insurance adding an additional $416 and $361 respectively. Home prices within the country have surged to the second-highest in history, ranging from $31,300 to a median of $446,300.

This move by D.O.G.E has impacted housing projects in over 1,000 communities and forced the closure of at least 8 national organizations that provided technical assistance to housing programs. Major non-profits such as LISC and Enterprise Community Partners have lost $30M in cancelled grants. The halt of these grants has led to mass layoffs for developers and contractors, affecting not only homeowners but also the broader housing industry. “This will devastate low-income families,” warned Enterprise CEO Shaun Donovan. “We’re losing thousands of affordable homes and local jobs overnight,” he added.

According to Realtor.com, the American housing market currently needs an additional 3.8 million homes to meet the housing demands of 2024. With D.O.G.E eliminating important funding, this gap is expected to grow, causing widespread concern.

Declining Home Sales and Rising Mortgage Rates

The current state of the US housing market is not favorable for either the government or buyers. Pending home sales saw a 4.6% drop in January, with significant declines in the Midwest, South, and West. The Pending Home Sales Index (PHSI), a key indicator based on contract signings, fell to 70.6 in January, an all-time low. Additionally, mortgage rates have suddenly risen from 6.91% to 7.04%, making homeownership in America increasingly difficult to achieve.

With declining affordability and critical funding nowhere in sight, the US housing crisis appears to be just beginning.