The mortgage finance and housing communities are hopeful of strong housing affordability policies from a second Trump term, but they expect the approach to differ from efforts under the Biden administration.
Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association, noted that the first Trump White House put together a task force on the housing affordability crisis from the local, state and federal perspectives. “I could see them returning to something like that,” he said.
Analysts at BofA Global Research said some of Trump’s proposals announced during his campaign could boost housing supply.
“It is possible under Trump 2.0 to see some regulatory ease for homebuilders,” the analysts wrote in a recent note. “Trump has also proposed using federal land for new construction.”
However, some of his ideas might not help much, the analysts added.
“Trump has proposed the mass deportation of five to 11 million illegal immigrants and prohibition of mortgage lending to undocumented immigrants, although we are not sure how much these two groups were contributing to housing demand to begin with,” the BofA analysts wrote.
Ed Pinto, co-director of the AEI Housing Center, said Trump’s deportation plans could free up some housing units, but they would likely be rental units.
Pinto noted that Trump has proposed selling some portions of federal lands in the West and Northwest, excluding federal landmarks and national parks.
In states such as California, Idaho, Washington, Oregon, Montana and Colorado, Pinto noted, land prices are particularly high relative to median income, so making new land available could lead to millions of new homes over the next 10 years, and more supply can help restrain prices.
Also, rolling back regulatory overreach could encourage more home building, Pinto added. Costs from newer energy efficiency standards in the FHA and U.S. Department of Agriculture home loan programs, for example, impact housing affordability, adding an estimated $30,000 to the cost of each newly built home.
Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders, said she’s optimistic that there’s a pathway for passage of the Neighborhood Homes Investment Act next year during discussions over expiring provisions of the 2017 Tax Cuts and Jobs Act.
The NHIA seeks to provide tax credits that would incentivize developers to construct or rehabilitate homes in eligible distressed communities.
“This may be an opportunity to [enact] this legislation that we might not have again for a while, and I hope Congress delivers,” Brundage said.
Jonathan Horowitz, director of public policy for the Housing Assistance Council, said the NHIA has been a priority for the group, noting that homeownership rates are higher in rural areas, and the cost to repair a house in rural areas can be higher than the appraised value of the home. Some Rust Belt cities have the same problem, he noted. Legislation to help renovate such homes could address the housing supply challenge, he noted.
The HAC also supports legislation that pairs rural housing dollars with funding for supportive infrastructure such as broadband access and water supply, Horowitz added.
Many have acknowledged that the federal government has limited levers to pull to control housing costs. As one, FHA last year cut its mortgage insurance premium to help low- to moderate-income homebuyers.
The Heritage Foundation’s Project 2025, published earlier this year as a blueprint for the next Republican president, proposed raising the FHA MIP for new loans with a term longer than 20 years.
Pinto supports a 20-year mortgage as it would help borrowers build home equity at an accelerated pace.
