Main Takeaway: The renter demographic is a large and growing one, and they overwhelmingly vote Democrat. Come the midterm election, if renters show up to vote it will give Democratic candidates a boost in the polls.
Story: On November 8, Americans head to the polls to decide the makeup of the U.S. Congress. The stakes couldn’t be higher, as the results will dictate the political atmosphere for the remainder of President Biden’s term.
As such, there are significant implications for the housing market writ large, as well as multifamily specifically. Here’s a breakdown of the issues that matter to multifamily owners and investors as November 8th approaches.
Renter Political Preferences
Rent is at record highs. This, amidst rising inflation, makes the renter persona highly price-sensitive in our current economic environment. This may lead to a higher voter turnout this midterm election season, according to a new report from Apartment List.
And, renters overwhelmingly vote for Democrat candidates.
Generally speaking, renters turn out less often than homeowners because they’re struggling financially, under work constraints, are a minority, or simply don’t have the right incentive to vote. According to USA Today, “less than a third – 29% – of those casting ballots in 2016 lived in renter-occupied housing cast ballots compared to 52% of those living in owner-occupied housing.” Further, according to the Apartment List report, in the 2018 midterms, 40% of eligible renters voted, compared to 59% of homeowners.
Further, among registered renters, 49% say that “rising housing costs have negatively impacted their families in the past year,” and 54% say that “housing is a key issue for them in the upcoming midterms.” This time around, 61% of renters say that they are “very likely” to vote in the midterms.
Apartment List concludes that:
Renter voices are significantly underrepresented in our nation’s politics, and boosting the voter turnout of this large demographic could have dramatic implications in the outcomes of elections. The most recent few national elections offer evidence that such a shift has already been starting to take place. And with the housing affordability crisis having rapidly grown in magnitude since 2020, there’s good reason to believe that political mobilization of renters may continue to pick up steam in the upcoming 2022 midterms and beyond.
Although the renter demographic has a chance to swing some votes toward the Democratic camp, it will have little effect on the regulatory fabric surrounding real estate and housing. There is still a Democratic President, so therefore the current regulatory policies that affect housing will likely stay in place.
The prospect of a more divided Congress means that it will be harder to pass new or controversial forms of legislation that affect the housing market. All of this is wrapped in the perception that the party currently in power in the White House is primarily to blame for the current economic environment. Therefore, rising costs and mortgage payments will serve as headwinds against Democratic candidates.
Indeed, according to the Financial Times:
High petrol prices have continued to serve as the Republicans’ main weapon on the campaign trail despite an overall decline in recent months. But the Federal Reserve’s steep interest rate increases this year have given them additional ammunition by triggering a swift rise in mortgage rates to levels not seen since the 2008 housing-led financial crisis…This has destabilised the housing market in many areas and raised concerns about affordability — two factors that are increasingly being cited by Republican politicians, who blame the administration of Joe Biden and congressional Democrats far more than the Fed.
Expert Take on Midterm Impact on Real Estate
“The most likely outcome…is a split Congress, with Republicans controlling the House of Representatives and Democrats remaining in control of the Senate…With a split Congress and two parties with opposing views…it will be hard to pass large meaningful industry-changing legislation…Even if Republicans win both the House and the Senate, it would be surprising for the party to win enough seats in both houses to withstand a Presidential veto. Therefore, a split Congress, or even a Republican-controlled Congress, will likely have a tough time passing meaningful legislation that would affect our industry.” — Mike Flood, the Mortgage Bankers Association