Categories: Sandy Herrick Blue Valley Specialist Realtor
President Donald Trump is expected to unveil significant proposals to improve housing affordability in a speech Wednesday morning, as his administration focuses on the housing crisis ahead of the midterm elections.
Trump will announce the plans during his special address at the World Economic Forum in Davos, Switzerland, following an intense multiagency brainstorm on potential solutions to the crisis, according to officials and social media posts.
White House spokesman Davis Ingle declined to offer specifics on the Davos speech, but tells Realtor.com® that Trump “will soon unveil new policy initiatives that will restore the American dream of home ownership.”
“President Trump pledged to improve housing affordability for Americans still reeling from Joe Biden’s economic disaster, and the Administration is committed to exploring every tool possible to deliver for the American people,” says Ingle.
While full details of Trump’s plan remain closely guarded, potential elements are believed to include proposals to limit institutional ownership of single-family homes, allow homebuyers to keep their old mortgage rate when they move, and offer penalty-free early withdrawal from 401(k) accounts to fund a down payment.
Trump may also elaborate on his plan for Fannie Mae and Freddie Mac to push mortgage rates lower by purchasing mortgage bonds, as well as his earlier call for Fannie and Freddie to stimulate more new-home construction.
Meanwhile, the White House appears to have shifted away from the idea of 50-year mortgages, after the proposal drew intense backlash when Trump shared it on his Truth Social in November.
The administration may accompany the Davos announcement with an executive order, but some of the proposed changes, such as early 401(k) withdrawals, would require congressional action, raising questions about whether that would garner enough support to pass.
“It’s exciting and significant for the president to bring up housing affordability as a key issue” at Davos, says Realtor.com senior economist Jake Krimmel. “Many countries across the developed world are facing a similar issue as the U.S.: The shortage of housing in desirable areas and in our most-productive cities makes shelter unaffordable, raises the cost of living without increasing living standards, and ultimately lowers economic growth.”
Krimmel adds that he hopes Trump, in his remarks in Davos, will focus on the housing shortage as the root cause of the affordability crisis, and propose policies to boost the construction of new homes.
However, Trump himself has expressed concerns that rapidly expanding housing supply would potentially reduce home values for existing homeowners, who enjoyed rapid appreciation during the pandemic-era buying boom.
“You create a lot of housing all of a sudden, and it drives the housing prices down,” Trump remarked last month. “I want to keep them up. At the same time, I want to make it possible for people to go buy houses.”
That dilemma has led Trump to focus extensively, and nearly exclusively, on mortgage rates as the solution to the housing crisis.
Mortgage rates dropped last week to a three-year low of 6.06% after Trump announced plans for Fannie and Freddie to inject $200 billion into mortgage bonds.
But weekly average mortgage rates, which are set by the free market, have remained stubbornly above 6%, as investors weigh the risks of inflation and widening government deficits.
A recent Realtor.com analysis found that mortgage rates would have to drop to 2.65%, matching their all-time low, to restore the housing market to the relative affordability of 2019.
If mortgage rates remain steady, incomes would have to rise 56%, or home prices would have to fall 35%, to achieve pre-pandemic levels of affordability—outcomes that are neither likely nor expected in the foreseeable future.
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