WSJ's Greg Ip: Affordability is as much a state of mind as it is an economic condition

Core Insights - The concept of affordability is increasingly prominent in political discourse, particularly following recent discussions involving President Trump and New York City Mayor Elect Zoro Mami, yet it remains a complex issue that is difficult to quantify and address effectively [1][4][5] - Public sentiment regarding affordability does not necessarily align with economic data, as perceptions of affordability can persist even when objective measures do not indicate significant deterioration [1][2][3] - The affordability crisis is influenced by various factors, including healthcare costs, housing prices, and consumer sentiment, which complicates the ability of policymakers to address the issue effectively [6][21][26] Economic Conditions - Despite a decrease in inflation rates from 9% to 3%, public perception of affordability remains negative, indicating a disconnect between economic indicators and individual experiences [3][15] - Mortgage rates and construction costs are significant contributors to housing affordability challenges, with rising interest rates impacting potential homebuyers [2][17][20] - The affordability index, which considers income, mortgage rates, and home prices, shows that current affordability is worse than pre-pandemic levels but similar to conditions before the 2008 financial crisis [21][22] Political Dynamics - Polling indicates that affordability is a bipartisan concern, with a notable percentage of Republicans acknowledging rising prices as a significant issue [5][6] - The Biden administration's approach to addressing affordability has faced criticism, particularly regarding the perception of inflation and its impact on public sentiment [3][4] - Local and state governments have the potential to improve housing supply by reducing regulatory barriers, which could positively influence affordability in the medium term [26][27]