A Midterm Election Tale: Money, Money, Money

Affordability may be top of the mind with midterm voters, but politicians are having no such problem. Gobs of cash are flowing from deep pocketed donors to House and Senate candidates.  With less than a month until Election Day, the contribution arms race is likely to shatter all records.

While voter enthusiasm may be flagging, donors are not facing a passion deficit.  More than $1.94 billion in campaign funds has been spent on Congressional races, according to USA Facts, which tracks federal contributions over two-years cycles for political races. 

The spending equals about 72.8% of the campaign funds raised this election cycle, which means there's still a gusher about to inundate the airwaves.  And the money is still flooding in.  By its own estimates, USA Facts projects the total campaign costs may eclipse the 2024 general election.

That bloated sum--$1.94 billion--represents only money spent by the candidates' campaigns. It does not include funds doled out by Political Action Committees (PACS) on behalf of candidates.  

Two years ago, presidential and Congressional races rang up a total price tag, including PAC expenditures, of $11.2 billion.  The midterms are on pace to hit $11.6 billion before the last ballot is cast, reports AdImpact, which tracks total political campaign spending.  

If money is the mother's milk of politics, then this year's midterms are a collective of dairy farms.

The current title for biggest midterm spender goes to Democrat James Talarico, who has lathered on $47.012 million to sharpen his image in a bid to beat Republican Ken Paxton for the Senate in Texas.  Paxton has spent $19 million.  Neither figure includes spending by political action committees. 

The money bag moniker in the House belongs to David Trone, a Maryland Democrat who has doled out $24.7 million.  Fellow Democrat House member Alexandria Ocasio-Cortez from New York has run up a tab of $20.38 million.  In the last House race, 192,555 New Yorkers voted in her district.  

Other candidates raking in the dough and spending as fast as they can are: Democrats Jon Ossof (Georgia), $39.6 million; Raja Krishnamoorthi (Illinois), $31.4 million; Sherrod Brown (Ohio), $22.3 million; Joshua Weil (Florida), $15.9 million; and Hakeem Jeffries (New York), $14.85 million.

The lone Republican making the Top Ten in the money race is Lindsey Graham's sister Darline Graham Nordone in South Carolina: $20.07 million. She was appointed to fill Lindsey's Senate seat after his death and is now running for a full six-year term.

Will all those dollar signs add up to victory for those with bulging campaign coffers?

Not if you believe the polling data.  More voters than ever tell pollsters they dislike both Republican and Democrat parties than in any recent election.  There is deep disaffection with politicians as well as government.  A Wall Street Journal poll found 21% of all voters want to throw out both parties.

More than 40% of those voters who reject both parties claim they remain undecided about which party's candidate will end up on their ballot.  That means Republicans and Democrats will be vying for support among a key group that distrusts them both. 

A poll by Pew Research supported the findings of the Journal.  Half of Americans view both political parties as "too extreme." Only 42% of Americans say Democrats govern "ethically and honestly," while just 39% have the same dim view of Republicans.  Americans want to throw out the bums. 

Many pundits point to sagging approval ratings for President Trump, about 30% according to Pew, as an anchor for Republican candidates. However, the titular leader pf the Democrat Party, Senator Chuck Schumer, is more unpopular--polling only 27% approval in an average of national polls. 

If you ask voters, there are no knights in shining armor jousting in the current political arena.  

Disenchantment with politics explains why the airwaves are filled with ads that touch on corruption, insider stock trading or increases in wealth for entrenched politicians. More than 340 different ads since September 1 have tackled those subjects, according to ad tracking firm AdImpact.  

Frustration with both political parties makes it nearly impossible to predict winner.  (This writer puts no faith in polls, based on lousy past performance.) Safe Republican or Democrat seats are now up for grabs. It's a topsy turvy environment where the odds flip daily.

All 435 House members are up for election.  Ballotpedia, a non-partisan, not-for-profit that covers elections, has identified 46 districts that are toss ups.  That is just 12% of the districts.  On the Senate side, 35 seats are up for grabs.  There are no clear favorites in only 12. 

However, if history is any guide, then the Republicans will suffer the fate of past administrations.  In 18 of the past 20 midterm elections since World War II, the president's party has lost House seats. The average is 26 seats.  Thirteen times the party in power lost both the House and Senate.

The exceptions were in 1998 when Democrats gained four House seats during President Clinton's second term and in 2002 under President George W. Bush when Republicans picked up eight members in the midterms. So it wouldn't be unprecedented for President Trump to hold the House.

However, the odds favor Democrats to at least pick up seats in the House, wresting the Speaker's gavel from the GOP.  The oddsmakers are evenly divided over the Democrats chances to gain the majority in the Senate. Nail biters are likely to tip the balance in the upper chamber. 

Regardless, the nation will have to wait until November 3 to find out for certain which party will control the two chambers of Congress. One outcome is certain. The election results in California will not be available for weeks after the ballots are counted in every other state..   

The Untold Story Of Affordability

What comes to mind when you hear the words "affordability"? The cost of gasoline? Grocery prices? Insurance premiums? Those household costs are the grist for a deluge of political campaign ads. But the price tag that has most Americans squawking is housing.  

Data from the Department of Labor reveals that housing prices have soared approximately 56% since 2020, while general inflation has spiked by about 29% during the same period.  Housing (shelter)  makes up the largest share of the Consumer Price Index (CPI)--about 36%.   

In other words, home prices have increased at almost twice the rate of inflation over the last six years. Overall inflationary trends cannot solely explain why today's home prices have hit the ceiling fan, pardon the word choice.

The current median price of a new home in the U.S. is $425,786, according to the National Association of Home Builders (NAHB). Existing median home prices are $434,800.  About 88.2 million households (or 65%) are unable to afford a median priced home at today's interest rates.

Those national averages may not apply to your market.  There are wide gaps between cities. Here are some comparisons between metro areas of median home sale (not the listed price) sales:

• San Jose, California:  $1.528 million
• Seattle, Washington: $814,757
• New York City: $735,000
• Boston, Massachusetts $710,000
• Birmingham, Alabama: $293,500
• San Antonio, Texas: $285,000
• Memphis, Tennessee: $271,000
• Louisville, Kentucky: $270,000
• St. Louis, Missouri: $262,750
• Cleveland, Ohio: $220,000

A leading national benchmark for residential real estate values--the Case-Shiller Home Index Price--calculated that single home prices skyrocketed 87% between December, 2015, through December, 2025.That is good news for existing homeowners, but impacts the affordability for potential buyers.  

Interest rates act as an overhang on housing affordability.  When the Federal Reserve began aggressively raising rates to quell inflation, the move triggered an increase in mortgage rates. Typically, mortgage rates move nearly in tandem with the 10-year Treasury rate.

The Treasury rate rises when the Fed hikes rates because it reflects an average of where investors expect short term rates to be over the next decade. Today, a 30-year fixed rate mortgage lugs a 7.2% interest rate. In January, 2021, the rate was 2.65%.  The pre-pandemic average was 3.41%.  

To demonstrate the impact, consider that when interest rates increased from 6.5% to 6.75%. It effectively priced out of the market around 1.3 million households. These households are unable to meet the higher income threshold required to afford the increased monthly payments.

Mortgage rates also negatively impact home buying because many households are sitting on ultra-low COVID era rates.  About 78% of Americans with outstanding 30-year mortgages have interest rates below 6%.  More than half (51%) are holding fixed rates pegged at 3.99% or below.

These homeowners are understandably reluctant to sell their residence and move even if they can afford a higher monthly payment.  Elevated home prices and hefty mortgage rates are a double whammy for first time buyers. They face the largest affordability gap, 

That explains why the average age of first-time homebuyers has leapfrogged to a record high of 40-years old, according to National Association of Realtors research. The average age has climbed from 32-years old only a decade ago. 

Consider 70% of households can only afford housing priced from $100,000 to $300,000, according to the NAHB data.  The average buyer would need household income of $147,433 to qualify for a mortgage for a median-priced home.  The annual median household income is $87,460 today.

That chasm between home price and income is what is frustrating young home buyers. 

Traditionally, starter homes for first-time buyers are newly built residences.  Housing starts for single family residences have dipped from 1.127 million nationally in 2021 to 940,000 in 2025. New home supply usually translates into more negotiating leverage for buyers of new and existing residences.

Projects with single-family home priced at $300,000 or below accounted for just 14.2% of the total in May, according to research on housing trends.  This was down significantly from 27.3% in May of 2019 when homes in this price range represented the second-largest portion of the new home market.

Median down payments have accelerated as buyers spend more money up front to lower their monthly payments in today's breakneck interest rate environment. In August, the median down payment was $27,166, which represents a jump of $4,000 from January.  

Input prices are also driving up costs for new homes.  Since the pandemic, costs for materials such as power transformers (72%), steel-mill products (77%), gypsum building materials (48%), brick and structural tile (29%) and ready mix concrete (33%) have forced builders to boost prices.

Material costs aren't the only issue influencing home prices.  Wage growth for residential construction trades jumped after COVID. National averages for heavy equipment operators have reached  $44.20 per hour; electricians $40; roofers $28.40; and construction laborers $24.80.   

Competition these workers are increasing as more factories and data centers are building built in the country.  The lack of experienced tradespeople is prompting calls for the opening of more training centers to encourage young people to qualify for these jobs.

Housing affordability matters not only to buyers; it impacts the nation's economy. Housing spending and investment accounts for 15% to 18% of Gross Domestic Product (GDP), a measurement of economic activity.  Home equity represents a major source of household wealth, accounting for 45%.

Every homebuyer wants to know the answer to this question: When will home prices ever come down?

The outlook for relief soon is cloudy at best.  Although household income is climbing, interest rates are the number one stumbling block to homebuyers. Robust interest rates translate into higher monthly mortgage payments reducing affordability, while suppressing new home starts. 

The Federal Reserve, which has tinkered with rates for six years, has yet to reach its target inflation rate of 2%.  Inflation was last exactly 2.0% in April, 2019.  The Fed has a mandate to tame inflation, but the downside of ever increasing rates is the suffocation of the home market.  

One suggestion worth considering is to make home mortgage rates portable.  Homeowners could buy a new or existing residence and retain their current interest rate.  Lenders would likely choke on the idea, but the current strategy is not healthy for the economy.  New ideas are needed to turn the tide.