President-elect Donald Trump will have many tasks awaiting him once he takes office in January, but one of the biggest on his to-do list will be giving the issue of housing affordability more attention, as the nation’s housing crisis became a major issue during this presidential campaign.
The problem of affordable housing was on full display Wednesday morning as Trump’s victory spurred a jump in the 10-year Treasury yield, which pushed the 30-year fixed mortgage rate to 7.13%, the highest level since July 1.
The reason for the increase appeared to be that traders saw some of Trump’s agenda as inflationary and expected rates to move higher with him winning the presidency. But the impact was made stronger by the “red sweep” effect, in which the Republicans also took control of the Senate and possibly the House of Representatives, giving them few barriers to passing programs that might be inflationary.
Despite Wall Street jitters, members of the housing industry were quick to welcome the 47th president back to the Oval Office. The Community Home Lenders of America (CHLA) released a statement saying that they congratulated Trump on his victory and look forward to working with his administration on the critical goal of creating accessible and affordable housing for borrowers.
“CHLA looks forward to working with President Trump, Vice President Vance, and the rest of the administration on the critical goal of creating accessible and affordable housing for borrowers – particularly those who are first-time and low-to moderate-income.”
Trump’s campaign did not release a detailed policy proposal for solving the housing affordability crisis, but the Republican platform calls for reducing mortgage rates by slashing inflation. They want to open limited portions of federal lands to allow for new home construction and promote homeownership by using tax incentives. They will cut red tape and regulations that raise housing costs.
On the campaign trail, Trump has blamed housing affordability issues on the recent surge in immigration. He has said that controlling immigration and deporting undocumented immigrants would reduce the demand for housing and lower prices.
CoreLogic Chief Economist Selma Hepp highlighted Trump’s idea of rezoning federal lands to build homes for first-time homebuyers as a sign that his reelection would usher in a deregulatory environment. However, she questioned how his policies would impact the affordability issue.
“With affordability and high mortgage rates remaining a huge challenge for potential homebuyers, it is not clear yet which of his policies would help provide relief, particularly given that rates are expected to remain higher under the ‘red sweep’ with tariffs and deportations adding to inflation pressures,” Hepp said. “However, extended tax cuts and additional incentives, such as a homebuyer tax credit and, or down payment assistance, may also be in the cards for this next Trump presidency.”
