President Donald Trump’s attempt to make homeownership accessible to more Americans is failing, just weeks after it was launched.
As voters signal portfolio issues are a priority heading into November’s midterm elections, the White House has launched a series of measures test balloons aimed at reducing the cost of buying a home, but several of them have been rejected by Congress, the financial industry or even Trump himself.
The result: About six weeks After promising “some of the most aggressive housing reform plans in American history,” the administration has struggled to implement new policies as mortgage rates have recently increased slightly. Trump acknowledged the corner he walked into, waffling on the very idea of lowering housing costs if it would hurt existing homeowners.
“We’re not going to destroy the value of their homes so that someone who hasn’t worked very hard can buy a house,” he told a cabinet meeting on Thursday.
Trump’s inertia on the issue comes as a majority of Americans believe he is not doing enough to address their broader concerns about the cost of living. A January CNN-SSRS Poll showed that 64% of respondents said Trump had not gone far enough in his attempt to reduce the price of everyday consumer goods. A New York Times/Siena Poll found that 51% of registered voters think Trump’s policies have made life less affordable, compared to 24% who think they have made life more affordable.
Housing is a particularly sore point for many Americans.
Home prices were up more than 50% from before the pandemic as of Nov. 30, according to the latest reading of the Case-Shiller National Home Price Index. Rents increased by around 35% over this period, according to Zillowwhile the median age of first-time home buyers has reached an all-time high 40 years old, according to the National Association of Realtors.
Meanwhile, Trump repeatedly got sidetracked, failing to tout the affordability proposals that the White House said would be a central part of his message heading into November.
Read: Trump continues to destroy the cost-of-living message his team stands for
Before that of the president appearance this month During the World Economic Forum in Davos, Switzerland, his collaborators presented his speech as an opportunity to develop his projects. Although Trump mentioned a few previously announced proposals, he did not offer new details and the speech was swallowed up by his speech. remarks on Greenland.
Similarly, at a rally this week in Iowa — a key battleground in the November election — Trump failed to mention several of the affordability proposals.
He also directly criticized one of his administration’s ideas to help Americans afford housing. After National Economic Council Director Kevin Hassett touted a plan to come to allow workers to use tax-advantaged accounts to fund their down payments, the president told reporters, “I’m not a big fan — other people like that.” People should leave their money in the market, he said.
The policies he still supports are ones he may have little power to implement.
Asset signed a decree January 20 aims to curb purchases of single-family homes by large institutional investors. But the order is relatively ineffective: It leaves it up to Treasury to determine what constitutes a large investor while urging Congress to pass legislation prohibiting such sales.
Even if Congress were to grant this request, it is unclear what impact such a decision could have on prices. Large institutional investors own less than 1% of the country’s single-family housing stock and only between 2% and 3% of its single-family rentals.
It’s not just housing policies that seem adrift.
House Speaker Mike Johnson rejected a proposal floated by Trump in a social media post capping credit card interest rates at 10% for one year, which is a “novel” idea that should not be taken seriously. JPMorgan Chase & Co., Jamie Dimon, said the cap would mean “economic catastrophe”.Little has been said about it since.
A decision announced by the administration which seems to be in progress is a plan to have Fannie Maé And Freddie Macgovernment-controlled companies that support the mortgage market buy $200 billion in mortgage bonds.
There are about $9 trillion in agency mortgage bonds outstanding, so if Fannie and Freddie do all the buying, that would represent a little more than 2% of the market. The move could lower mortgage rates by as much as 25 basis points, or 0.25 percentage points, analysts say. THE current rate on a 30-year fixed loan is 6.1%, according to Freddie Mac.
“Needle mover”
This might not be enough.
“If the expected effect is a 25 basis point rate cut, that’s not a problem,” said Ed DeMarco, chairman of the Housing Policy Council and former acting director of the Federal Housing Finance Agency from 2009 to 2014.
Current FHFA Director Bill Pulte last week fired a AP Report that companies had been given the green light to increase their purchases of mortgage-backed securities to have a greater impact on the market. In a post onhe said, “the total additional MBS purchases will not exceed $200 billion.”
But keeping purchases capped means mortgage spreads will widen once spending stops, according to Jim Parrott, a nonresident fellow at the Urban Institute, who said the move “will only impact the cost of a mortgage as long as investors believe the additional demand will be there.”
Once the funding is spent, “the administration will have to decide whether it wants to spend another $200 billion to keep prices lower for longer,” he added. “It might be hard for them to stop.”
