The issue of housing affordability has become a major concern for voters in the upcoming presidential election. Home prices in the US are currently at an all-time high, while rents are nearing record levels. There are several factors that have contributed to this housing crisis, including limited housing inventory and high mortgage rates.
Former President Donald Trump has acknowledged the housing affordability crisis and has outlined his plan to address it. He aims to reduce mortgage rates by combating inflation in the US economy. The Federal Reserve’s efforts to fight inflation have led to higher Treasury yields, which in turn have affected the mortgage market. While mortgage rates have slightly come down since their peak in 2023, they are still higher than the all-time low recorded in 2020.
Trump’s plan also includes promoting homeownership through tax incentives and cutting unnecessary regulations that raise housing costs. He has established a White House Council on Eliminating Regulatory Barriers to Affordable Housing, which has identified regulations as a major contributor to high housing costs. The National Association of Home Builders has estimated that regulations account for an average of 40.6% of apartment development costs.
Another proposal from Trump is the creation of “Freedom Cities,” which would involve building new cities in the US to provide affordable housing opportunities. Additionally, he believes that deporting millions of illegal immigrants could help alleviate the housing shortage and increase affordability.
On the other hand, Vice President Kamala Harris has also presented her plan to address the housing affordability crisis. She aims to construct 3 million affordable rental units and homes, as well as provide first-time homebuyers with up to $25,000 in down payment assistance. Harris also plans to slash red tape to speed up the homebuilding process, but unlike Trump, she would punish companies that hoard homes to drive up prices.
The current administration, under President Joe Biden, has also taken steps to tackle high housing costs. They have introduced new tax credits, including a $10,000 refundable mortgage relief credit for first-time homebuyers and a $10,000 tax credit for owners of starter homes. These measures aim to make homeownership more attainable and boost new housing construction.
Economists have offered mixed assessments of the policy proposals from both candidates. While some believe that reducing mortgage rates and loosening building regulations could make homes more affordable, others are concerned about the potential negative effects of down payment assistance and rent caps. The issue of housing affordability is complex, and there is no easy solution.
Looking ahead, experts anticipate decelerating growth in home prices. However, addressing the housing affordability crisis will require significant reforms, particularly in the areas of zoning and land-use regulations. While both candidates have proposed solutions, the details are lacking, and it remains to be seen how effective these measures will be in restoring affordability.
Ultimately, the challenges in the housing market are related to a mismatch of supply and demand, as well as affordability issues. Any attempts to spur homeownership will need to address these underlying challenges. While the presidential candidates have outlined their plans, the success of these proposals will depend on their ability to garner support in Congress and overcome the complexities of the housing market.
