For this month’s Heart and Home, I am writing a companion piece to Cory’s post about how housing costs impacted our recent national elections.
Post-election punditry has been talking a lot about the price of eggs, bacon, and gasoline prices and how anxiety around rising costs swung the election. But there is a disconnect between this analysis and the reality of what the data show. Economic anxiety in this recent election was not because of food and gas prices. Instead, this was a housing cost election (if it actually was an economic anxiety election at all, which is another story entirely).
First, as shown by Table 1, below, housing is the single biggest expense in a typical family’s household budget. Housing costs account for more than the next two biggest cost categories combined. That is, on an annual basis, people pay more for housing than for their total combined costs for eggs, bacon, gas, car payments, car insurance, dining out, beer, soda, bottled water, coffee, airfare, bus fare, new tires, oil changes, cereal, avocados, toast, avocado toast, etc. That is, housing costs are a much more significant burden on families than the cost of eggs, bacon, and gasoline.
Table 1. Housing is the Single Biggest Expense in a Typical Family’s Budget
| Item | Typical Percentage of Household Expenditures (non-Rural) |
| Transportation (includes gas, vehicles, insurance, public transportation) | 15.9% |
| Food and beverages (includes groceries and eating out) | 14.4% |
| Health Care | 8.0% |
| Recreation | 5.3% |
| Household Furnishings and Operations (includes services/repairs, furnishings, appliances) | 4.5% |
| Household Energy/Utilities | 4.4% |
| Communication (includes phones, internet, and computers) | 3.4% |
| Apparel | 2.5% |
| Education | 2.5% |
| Personal Care (includes hair, dental, cosmetics, and services like financial and legal services) | 2.4% |
| Tobacco and Smoking Products | 0.5% |
| Housing, Shelter (includes rent or mortgage) | 36.2% |
Second, as shown in Table 2, below, in the past year, prices for some household expenses (notably gasoline) fell, while housing cost increases continued to outpace the inflation rate. Food price increases were lower than the overall inflation rate, which was 2.6% year-over-year, not seasonally adjusted.
Table 2. In the Past Year, Rising Housing Costs Outpaced Increases in Most Other Major Cost Categories
| Item | Oct 2023 to Oct 2024 Unadjusted Change in Price |
| Transportation services (does not include gas which is included under “Energy” or vehicles, which are included under Commodities less Food and Energy”) | 8.2% |
| Medical Care Services | 3.8% |
| Food | 2.1% |
| Commodities less Food and Energy | (1.0%) |
| Energy | (4.9%) |
| Housing, Shelter (includes rent or mortgage) | 4.9% |
Because housing is a cost we pay monthly and we mostly don’t experience it rising on a day-to-day basis and because monthly costs are fixed for significant proportion of the population (the majority of US householders are homeowners and a substantial number of renters are on multi-month leases), rising housing costs may not be something that is top of mind when a reporter asks the “average” person about inflation. In contrast, we buy groceries and fill our gas tanks once a week or more. We feel more frustrated by food and gas costs because they are more in our face. But, the data tells us that there is more of a squeeze from housing costs and that the housing cost squeeze is getting tighter, faster – despite what might have happened with the costs of goods in the years after COVID fritzed our supply chains. Many goods and commodity costs have stabilized (albeit at prices higher than we would like) while housing costs continue to rise. This is national data, not just here in Silicon Valley (though we have an especially severe version of this problem in the Bay Area).
AND, if you look again at Table 1, you’ll see that the so-called typical American household is housing cost-burdened – i.e., pays more than 30% of income on housing costs. Over the years, housing costs have become a higher percentage of average household expenses, such that families have had increasingly less to spend on everything else. This state of constant housing cost-burden is an underlying (if not fully acknowledged) primary cause of economic anxiety.
All of this is important to call out because, by misdiagnosing our problems, we focus on the wrong remedies. If we fixate on bacon and eggs, we lose sight of the importance of housing in this current moment.