Former President Donald Trump has introduced two proposals aimed at addressing housing affordability in the United States, targeting Wall Street.
Institutional Investor Ban Proposal
Trump proposed a ban on large institutional investors from purchasing single-family homes. This initiative is presented as a measure to control rising housing prices.
Mortgage Bond Purchase Proposal
Additionally, Trump indicated an intent for the government to buy $200 billion in mortgage bonds. The stated objective is to reduce mortgage interest rates and subsequently lower monthly payments for homeowners.
Expert Analysis on Potential Impact
Economists have commented that the 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, although their presence is more pronounced in specific Sun Belt markets, such as Atlanta (25% of rentals) and Charlotte (18%). The primary factor driving high home prices is identified as a persistent lack of housing supply, with an estimated deficit of 4 million homes needed to achieve affordable levels.
Regarding the mortgage bond purchases, experts note that while such actions could lower mortgage rates, they do not address the fundamental issue of housing supply. It is suggested that 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; the current median home price, approximately $410,000, is primarily attributed to the chronic shortage of available homes.
Broader Solutions Suggested by Experts
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.