The housing crisis continues to worsen in the U.S. and flatten young Americans' hopes of buying a home, but a new proposal being touted by President Joe Biden would actually make it worse, at least according to some experts.

Housing affordability in the U.S. is at its worst level in 40 years, according to a report from Redfin. Higher mortgage interest rates, low housing inventory, and skyrocketing housing prices have forced more and more Americans to give up their dream of owning a home.

A Redfin survey of homeowners and renters found that 64.2% of respondents said that the lack of housing affordability makes them feel negative about the economy. A majority, 53%, said that housing affordability will affect who they vote for in November, which likely hurts the incumbent president.

While Biden acknowledged the housing crisis in his State of the Union address in March and claimed that Democrats were working to "bring housing costs down for good," one of his policy prescriptions is likely to make the situation far worse.

'Housing prices will increase and mortgage payments will increase.'

Blaze Media spoke to real estate economist Ken Johnson, who explained why the president's plan would almost certainly lead to housing being less affordable, not more.

The plan as outlined by Biden is to give first-time and repeat homebuyers a tax credit that amounts to $400 per month for two years in order to help them pay the mortgage. The Biden administration estimates the program could help as many as 3.5 million families in the middle class.

"This is just providing money to a segment of the society that perhaps rightfully needs the extra funding, but it allows them to go out and bid more. That just means the government will be pumping money into the economy," said Johnson.

"So some buyers will able to go out and pay more, and as a consequence prices will rise very quickly. It's going to be inflationary, and it's going to be inflationary in the face of high interest rates," he added. "What is going to happen is housing prices will increase and mortgage payments will increase."

Johnson addressed the argument that the subsidy would target personal home buyers and give them an advantage over corporations and other companies that purchase single-family homes.

"The problem is that the vast majority of home buyers are already individuals; it's going to be families, it's going to be households," he explained. "If you give everyone $400 to buy automobiles, then the price of automobiles will rise by $400. It will all be inflationary."

Others agree with this assessment.

"In a best-case scenario, this tax credit gives builders enough confidence to keep building," said Realtor.com chief economist Danielle Hale, according to SFGate.

But, she adds, "without the supply boost, this tax credit could bring out more buyers, there aren’t more homes for sale, and home prices go up."

Ed Pinto, the co-director of the Housing Center at the American Enterprise Institute, added to the criticism.

"Over the years, the government has done a great job at juicing demand but has failed miserably at increasing supply. This is especially true when housing supply is as tight," Pinto said, according to SFGate.

Johnson also pointed out that the proposal runs counter to what the Federal Reserve Board is trying to do by forcing inflation higher when the Fed is actively trying to keep inflation from rising above a 2% rate while keeping unemployment steady.

"We'll get there eventually, but this would not help, and it would work against the Fed mandates, quite honestly," he added.

He went on to say that the Biden administration is banking on the proposal not passing and just wants to mollify the public into believing Democrats tried to do something to help the housing crisis.

"I don't think this will pass," said Johnson. "Both sides make these kinds of electioneering promises that never pass. It's really a coin toss between the two parties as to which side actually has the better housing record."

Is there any solution to the housing crisis?

Johnson says the key to easing the housing crisis is simply building more housing units.

"What would help more than anything else would be for the government to make it easier to build units that are for sale or for rent. We simply need to be able to build more units," he explained.

While there are many obstacles to increasing housing, Johnson said previously successful efforts in doing so could be a guide for today.

"We've solved these problems once before. In the decades after World War II, we came up with the Fair Housing Act and funded Fannie Mae and Freddie Mac, in order to fund mortgages on houses built to improved standards," he continued.

"You know how people say homes aren't built the way they used to be? Well, it's true, because the old ones all fell down!" Johnson joked.

He went on to explain that federal plans in the past had succeeded in increasing housing stock but that the current situation made it almost impossible to replicate.

"If I could wave a magic wand, I think I would increase the number of major developers. In the old days before the last housing crash, we had tens of thousands of builders around the country. Okay, they're not there today. They're just not there today. So we don't have the ability to gear up and produce massive numbers and to be competitive, quite honestly," he continued.

He said the federal government should focus on easing restrictions on developers and providing incentives for large-scale building.

"Now all of a sudden, we have tens of thousands more of small builders that are out there, that could be competitive, and they could be more responsive to market needs. It certainly would help to be able to bring a home to to actual construction in a shorter period of time," Johnson said.

"But, you know, that's a lot of wishful thinking right now," he added. "There's really nothing we can do in the short term right now, except for to encourage the construction of more properties, whether it be multi-family rentals or single-family residences. We just need more units."

Johnson has concluded that Biden's housing plan was unserious at best and counterproductive at worst.

"This is simply an inflationary proposal," he said. "This was just a political promise that both sides know they won't actually have to deliver on."

While many were hopeful that the Fed would lower rates in 2024 after inflation slowed, mortgage interest rates have remained stubbornly high. Without a magic bullet to ease the housing crisis immediately before the election, it is likely that housing will continue to be a thorn in Biden's presidential campaign.

Blaze Media reached out to Biden's top economic adviser for comment but did not receive a response.

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