President Donald Trump has committed to addressing the housing affordability crisis; however, the White House has provided limited information regarding its strategies. A bipartisan coalition in Congress is advancing its own proposal. Legislators in both the Senate and the House of Representatives have put forth a series of bills aimed at tackling elevated housing costs and the scarcity of affordable housing through the reform of zoning regulations and the reduction of federal obstacles to construction. The bill from the House is anticipated to undergo a floor vote within this week. Washington faces mounting pressure to tackle the elevated cost of living, with housing emerging as a significant concern. In recent years, escalating home prices and consistently high mortgage rates have rendered homeownership unattainable for millions of Americans. A recent poll revealed that over fifty percent of registered voters indicated that the escalating cost of housing has rendered it unaffordable. Since the 2008 financial crisis, homebuilding has been sluggish, resulting in a housing shortage that has driven prices upward as demand significantly exceeds supply in many regions of the country. According to an October estimate from Goldman Sachs, an additional three to four million homes must be constructed to bridge the existing gap. The legislative package put forth by Congress seeks to address the housing shortage in a direct manner, with the bill approaching finalization.
The Senate’s ROAD to Housing Act, spearheaded by South Carolina Senator Tim Scott, a Republican, and Massachusetts Senator Elizabeth Warren, a Democrat, was approved late last year as part of a larger legislative package but was ultimately removed from the final agreement reached with the House. The Senate is anticipated to cast its vote on a standalone iteration of its bill in the forthcoming weeks. The House’s companion bill, introduced by Arkansas Representative French Hill, a member of the Republican Party, is titled the Housing for the 21st Century Act. The House measure is more limited in scope than that of the Senate, featuring 25 provisions in contrast to the Senate’s 40. The White House has yet to provide a response regarding whether Trump would endorse a version of the bills should they arrive at his desk; however, his administration has previously indicated support for the Senate’s proposal. Numerous housing experts identify local zoning regulations and bureaucratic obstacles as the primary causes of the deceleration in homebuilding. This presents a challenge for the federal government, as each local jurisdiction establishes its own regulations. According to the findings of the Goldman Sachs report, relaxing land-use regulations could facilitate the addition of 2.5 million housing units in the United States over the next decade. The legislation encompasses measures aimed at incentivizing states and local governments to implement more favorable land use and zoning policies, thereby promoting an increase in housing production. “State and local governments are directly in charge of what’s built in their jurisdictions,” stated Andy Winkler. “Both packages aim to provide state and local governments with enhanced tools, guidance, and increased flexibility to implement pro-housing policies.” The Senate’s bill proposes to link certain community development grants from the Department of Housing and Urban Development to housing production metrics, providing incentives in the form of bonuses to local governments that expedite homebuilding, while simultaneously decreasing funding for those that do not meet the established benchmarks. The House’s bill would mandate that recipients of community development grants provide reports on local policies that limit housing supply, such as zoning laws.
Both packages would provide funding to local governments for the creation of pattern books, which consist of housing designs that have received government approval to facilitate expedited local construction. The proposed legislation aims to facilitate the expansion of the supply of manufactured homes, which are produced in factories and generally offer a more rapid and cost-effective alternative to conventional, site-built residences. According to federal legislation established in 1974, manufactured homes are required to be constructed on a permanent chassis, which is a wheeled foundation enabling transportation, akin to conventional mobile homes. In practice, however, the majority of manufactured homes remain stationary once they arrive at their designated location. The necessity of incorporating wheels increases expenses and may restrict the locations where these residences can be situated, frequently relegating them to mobile home parks due to local zoning regulations. The Bipartisan Policy Center suggests that abolishing the rule may lead to a decrease in the cost of each manufactured home by $5,000 to $10,000.
The country’s housing stock is experiencing aging as a result of a decline in new construction that has persisted for nearly two decades. The most recent US Census data indicates that the median age of homes stands at 40 years, with almost 50% constructed prior to 1980. This figure represents an increase of nine years compared to the median age of homes recorded in 2005. According to a 2023 report from the Harvard Joint Center for Housing Studies, millions of those homes have deteriorated significantly. The proposed legislation aims to facilitate access to loans for homeowners and landlords, enabling them to undertake repairs and modifications necessary for the modernization of aging properties. The legislation aims to facilitate the conversion of vacant offices and other underutilized structures into residential apartments, a trend that has gained traction following the surge in remote work during the pandemic. Trump has increasingly focused on the home affordability issue in recent months, presenting a range of proposals designed to alleviate the problem. Last month, he signed an executive order prohibiting large institutional investors from acquiring single-family homes, a decision that analysts suggest will not markedly enhance the availability of homes in the market. Trump also announced a strategy to lower mortgage rates by having Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants, purchase $200 billion in mortgage bonds. Allies of Trump have indicated that they might permit individuals with 401(k) retirement plans to utilize their funds for home purchase down payments without incurring penalties. In aggregate, Trump’s proposals are expected to enhance demand in the near term; however, they are unlikely to address the persistent scarcity of available homes, according to Daryl Fairweather. “As demand increases in a supply-constrained market, it inevitably leads to higher home prices, making it increasingly difficult for individuals in the future to afford homes,” she stated. However, Trump has indicated that he prefers not to increase the supply of homes excessively in order to safeguard the wealth of current homeowners.
“Individuals who possess their residences, we will maintain their wealth. We’re going to keep those prices up,” Trump stated last month. “We will not undermine the value of their homes.” Winkler noted that in numerous locations, increasing supply may not lead to a decline in home prices; instead, it could temper the pace at which prices persist in rising following significant increases in recent years. “It’s a longstanding issue in the housing sector. “You want individuals to have the means to afford it, yet we have also established homeownership specifically as a secure avenue for your investment,” Winkler stated. “It is to be hoped that this will encourage markets to find a more balanced equilibrium, avoiding extremes in either direction.”