Finance
Mortgage payments soar for prospective homeowners in swing states
Housing payments have risen by 92% in swing states since 2020. (iStock )
The housing affordability crisis is hitting swing states hard. These battleground states, which could potentially be won by either candidate, are especially focused on the issue of affordability in the upcoming election. About nine in 10 adult Gen Zers reported housing affordability is important when deciding who to vote for, Realtor.com found.
Housing payments in swing states have nearly doubled since the last election, rising by 92% to $2,161, on average. Rising home prices and mortgage rates have largely contributed to this jump in ownership costs. The average sales price in swing states increased by about 40% since 2020, and now sits at just over $316,000 in 2024. Mortgage rates have more than doubled to about 7% since the beginning of 2021, when they were 2.65%, on average.
Both red and blue states have faced similar fates, but red states have fared slightly worse, with median housing payments rising by 95%. Blue states saw an increase of 83% in average mortgage payments, according to Realtor.com.
These increases in housing costs have made it impossible for many residents in swing states to afford an average-priced home, based on the general rule that households shouldn’t spend more than 30% of their income on housing costs.
To afford the monthly costs of owning a home in a swing state, the average family income must be $86,421 to stick to the 30% rule. Just four years ago, the income required in these states was just over $45,000. To give some perspective, a household earning the median income in swing states would currently need to spend 32.8% of their income to comfortably afford a home versus the 21.8% they needed to spend back in 2020.
If you’re thinking of shopping around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
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Lower-income groups struggle most in swing states
Housing costs have grown unaffordable for many families in swing states, but lower-income households and certain social groups have struggled the most under high home costs. Income growth simply isn’t keeping up with the more rapid growth of housing prices.
“Voters in swing states care about housing affordability because soaring home prices and mortgage rates, along with a shortage of homes for sale, have made homeownership feel impossible for some Americans. That’s especially true for young people who are earning low incomes and haven’t yet built up their savings, making them feel it would be an uphill battle to reach their parents’ level of financial success,” Redfin Senior Economist Elijah de la Campa said.
“While swing states have historically had lower housing costs than blue states — and most still do — markets in swing states have not been immune to the affordability crunch the country has been facing for the last several years. The inability to afford a home is making a lot of voters feel bad about the economy and their financial prospects,” said de la Campa.
Black and Hispanic households, in particular, face difficulties securing affordable housing. The average Black household in a swing state would have to spend 48.2% of their income to afford a typical home while the typical Hispanic family would spend 38.3% of their income. This is up for both of these groups compared to 2020.
Comparatively, white families would need to spend just 29.8% of their monthly earnings on a home to realistically afford it, so they’d be able to slide under the 30% spending mark suggested by experts. This is still up from 19.8% needed in 2020.
If you’re looking to purchase a home, consider visiting Credible to find the best mortgage rate for your financial situation.
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Rate cuts are expected later in the year
Rate cuts are expected in September, on the heels of a cooling inflation report. The Federal Reserve has been waiting on rate cuts until the economy shows more consistent signs of recovery, namely lowering inflation. This hold on rate cuts has led to increasing mortgage rates that have hovered in the 7% range for the better part of a year.
In anticipation of rate cuts, mortgage rates have fallen in recent weeks, landing at 6.78% recently. Although rate cuts would be welcome across the board, experts remain divided on just how much more mortgage rates would drop if the Fed chooses to cut rates in September.
Many believe that rates won’t drop by as much as prospective homebuyers would like. In fact, the first rate cut could have little effect on mortgage rates. Assuming the Fed continues to cut rates throughout the year and into 2025, then buyers could see more downward movement on rates.
Still, buyers have been waiting long enough for rates to drop, that any movement may lead to larger home sales.
Consumers that want to see what kind of loan term and rates would work for them can take advantage of Credible’s free online tools.
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Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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