Trump's Housing Policy: Balancing Homeowner Values and Affordability
Former President Donald Trump has outlined housing policy proposals, including a ban on institutional investors purchasing single-family homes and a plan for the government to buy $200 billion in mortgage bonds. These proposals are presented as efforts to influence housing costs and mortgage rates. His stated philosophy prioritizes maintaining or increasing home values for current homeowners. These ideas are introduced within a broader national discussion on housing affordability, which economists and real estate professionals attribute primarily to a shortage of housing supply and various market dynamics.
Trump's Stated Philosophy on Home Values
Donald Trump has indicated a preference for maintaining high home prices.
"I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes." He added, "We’re not going to destroy the value of their homes so that somebody that didn’t work very hard can buy a home."
This position, expressed on January 29, centers on safeguarding existing homeowners who have experienced an increase in their property values, contrasting with a previous campaign goal to reduce the cost of new homes by eliminating regulations. Trump noted that many individuals have gained wealth due to increased home values and suggested that making housing "too easy and too cheap to buy" could lead to a decrease in these values.
Key Policy Proposals
Trump's proposals include:
- Institutional Investor Ban: A ban on large institutional investors from purchasing single-family homes, presented as a measure to control rising housing prices.
- Mortgage Bond Purchases: An intent for the government to buy $200 billion in mortgage bonds, with the stated objective of reducing mortgage interest rates and subsequently lowering monthly payments for homeowners.
- Interest Rate Adjustments: Suggestions that cutting interest rates, potentially through Federal Reserve actions, could support high home prices while lowering mortgage payments.
During his 2024 campaign, his team also proposed creating tax breaks for homebuyers, reducing construction regulations, and making federal land available for housing. Additionally, advisers suggested that increased housing stock would result from Trump's proposed mass deportations. Trump has opposed suggestions to permit buyers to use 401(k) retirement accounts for down payments, citing a desire to keep funds in the stock market.
The National Housing Affordability Challenge
Housing affordability is a significant national concern. A median-priced home consumes nearly half of a middle-income family's earnings, and renters spend almost 40% of their total expenditures on housing. The primary factor driving high home prices is often identified as a persistent lack of housing supply.
There is an estimated deficit of 4 million homes needed to achieve affordable levels in the U.S.
The current median home price is approximately $410,000. Housing prices have generally outpaced income growth over several years, complicating saving for down payments and upgrading homes.
Analysis: Institutional Investor Ban
Economists have commented that a proposed ban on institutional investors would likely not significantly affect overall housing affordability. Institutional investors account for a small percentage, between 1% and 3%, of national home purchases. Their presence is more pronounced in specific Sun Belt markets, such as Atlanta (25% of rentals) and Charlotte (18%).
Analysis suggests that institutional investors own less than 1 percent of America's single-family homes, a share considered too small to explain high national home prices. Data indicates that these investors have never accounted for more than 4 percent of annual home sales, even when including multi-family homes. Furthermore, institutional investment in single-family homes is concentrated in relatively affordable cities, such as Atlanta, Charlotte, and Jacksonville, while holding a negligible share in high-cost cities like New York City, Boston, San Francisco, and Los Angeles.
While institutional investment may marginally increase home prices in some markets, analysis suggests it has contributed to reducing rents, potentially leading to a net-positive effect on affordability.
This impact is attributed to:
- New Construction: Institutional investment often finances the construction of new houses, expanding the total housing stock.
- Economies of Scale: Large landlords can operate more efficiently, potentially lowering operating costs and allowing for more profitable production of rental units and quicker expansion of rental supply.
- Rental Market Expansion: Institutional investors convert homes from the for-sale market to the rental market, increasing options for renters.
Empirical research supports these findings. A 2025 paper from economists at Dartmouth College and the Department of Justice suggested that rents in Atlanta would be 2.4 percent higher without institutional investment in its single-family housing stock. A separate study reported that for every one percentage point increase in institutional investors' share of an area's single-family rental market, rents fall by 0.7 percent. Institutional investment in single-family homes also appears to reduce racial and socioeconomic segregation by providing rental housing options in suburbs.
Analysis: Mortgage Bond Purchases
Experts note that while government actions to purchase mortgage bonds could lower mortgage rates, they do not address the fundamental issue of housing supply. This approach may not be sufficient to counteract the "lock-in effect," where existing homeowners are reluctant to sell due to favorable current mortgage rates. Historically, mortgage rates around 6% are not uncommon. Critics suggested that advocating for the Federal Reserve to reduce benchmark interest rates, a past approach of Trump's, could contribute to higher inflation. Changes to monetary policy could also lead to an increase in long-term interest rates, which directly impact mortgage costs.
Broader Perspectives on Housing Supply and Regulation
The analysis suggests that the US housing crisis is primarily driven by scarcity and policies that restrict new construction. Experts suggest that more effective federal actions to improve affordability could involve creating incentives for state and local governments. These incentives would focus on increasing housing supply through measures like streamlining permitting processes and increasing zone capacity to allow for more dense construction. Proposals to relax zoning constraints to increase housing supply have gained bipartisan support, championed by groups like the homebuilders lobby and the Biden administration.
However, recent research challenges the narrative that stricter zoning laws are the main cause of rising housing prices and that deregulation alone can resolve the issue quickly. This research suggests that housing prices have generally risen in line with average incomes, but average incomes across urban America have not kept pace with the rising wages of college-educated workers. For instance, in Houston, a city with relatively relaxed zoning, rents increased by approximately four times between 1980 and 2019, aligning with wage growth for college graduates but significantly outpacing wage gains for non-college workers. In San Francisco, a more regulated construction environment, rents rose sevenfold on average during the same period, far exceeding the 3.5-fold wage increase for non-college workers.
While increasing housing supply can exert downward pressure on prices, the speed of this impact is a critical factor. Researchers estimated that a 1.5% annual increase in housing stock—a high growth rate—would reduce prices by 0.6% to 4% per year, potentially taking a significant number of years for housing to become affordable for lower-income workers. This analysis also does not account for potential increases in land prices and construction costs. Alternative proposals, such as expanding rent control, have also been evaluated, with studies suggesting they may reduce the overall supply of affordable housing.
During Trump's previous tenure, the U.S. Census Bureau reported a decline in pending construction. Permits for single-family homes decreased by 9.4% over 12 months leading up to October, reaching an annual rate of 876,000. Edward Pinto, a senior fellow at the American Enterprise Institute, estimated that single-family home construction would need to increase by 50% to 100% over the next three years to stabilize average home price gains.
Political and Demographic Considerations
Trump's stated preference for maintaining high home prices could enhance his standing with older voters, a demographic historically more likely to participate in midterm elections. AP VoteCast data from the 2024 presidential election indicated that 81% of Trump's voters were homeowners.
A Republican advisor from polling firm Cygnal, Brent Buchanan, indicated that by focusing on older voters regarding housing, Trump risks alienating younger voters who contributed to his coalition in the 2024 election.
Buchanan suggested this approach could initiate a "generational war" in midterm elections.
Oscar Pocasangre, a senior data analyst at New America, noted that older voters generally have higher turnout rates than younger voters. Prior to recent elections, affordability was a consistent concern among voters, particularly housing affordability for younger voters.
Real estate professionals observe a significant lack of inventory in the housing market, with properties often receiving multiple offers. They suggest new construction could improve home affordability. Indications suggest bipartisan interest among lawmakers in increasing housing supply prior to this year's elections, with both the Senate and House pursuing initiatives to stimulate construction.