During his speech at the World Economic Forum in Davos on Wednesday President Donald Trump outlined three policy initiatives he was undertaking to help improve housing affordability for American consumers.
In the speech, he did discuss his “ban” on large institutional investors purchasing single-family homes, his direction to the government-sponsored enterprises (GSEs) to acquire up to $200 billion in ипотечные ценные бумаги (MBS) and his call on Конгресс to cap credit card interest rates at 10% annually, which he said would help support increased homeownership.
“America will not become a nation of арендаторы,” Trump declared during his speech.
Real estate brokerage leaders told HousingWire that they view the Trump administration’s focus on housing affordability challenges as an overall positive.
“I certainly appreciate the Administration acknowledging housing affordability issues,” Крис Келли, генеральный директор ДомУслуги Америки, wrote in an email. “Every incremental effort to ease pressure in today’s housing market is worth considering.”
Энтони Ламаккья, the broker-owner of New England-based Ламаккья Риэлти, added: “I love the fact that we have a president who is putting housing in the forefront and making it a priority.”
Will Trump’s ‘ban’ on institutional homebuying move the needle?
President Trump announced a “ban” on institutional homebuying, which most brokerage leaders that spoke with HousingWire found this to be a positive move, but were uncertain of exactly how large the impact would be.
“Before the Great Recession there was no institutional market in residential single-family housing. The Great Recession allowed that to happen because prices were so low, and investors were able to scoop up those homes and then run with it because it made economic sense,” Mike Pappas, the CEO of The Keyes Co./Иллюстрированные свойства, said.
Lamacchia shared a similar view noting that there was a time when the housing industry was “very happy” to see institutional investors purchase properties because inventory was so high. However, he doesn’t think the ban will have much of an impact in New England due to the historic lack of institutional investor activity.
In Massachusetts, Chip Stella, one of the broker-owners of Wellesley, Massachusetts-based Недвижимость Ратледж, echoed Lamacchia’s sentiments.
“I feel very fortunate that institutional investors have not penetrated our market. It’s hard to know and find out if and where institutions are buying homes, but I feel like for the greater Boston market, there is very little institutional investments,” Stella wrote. “I totally support eliminating corporations buying single-family homes but that won’t change the inventory market in greater Boston.”
Other brokerage leaders agreed that the idea sounds good in practice, but they are skeptical of how large of an impact it will actually have.
“The data show that large institutional investors own a relatively small share of the nation’s housing stock, generally estimated at well under 5% of single-family homes nationally, and closer to 1–3% of single-family rental stock, even if concentrations are higher in a few specific metro areas,” Kelly wrote.
Lower mortgage rates
As for Trump’s directive that the GSEs acquire up to $200 billion in MBS, brokerage executives again believe that this could have at least a small impact on affordability.
“Expanding GSE purchases of mortgage bonds can have a modest impact on mortgage rates as we’ve seen,” Kelly said.
Lamacchia added that he appreciates how this move would take the reserves built up by Фанни Мэй и Фредди Мак and put them towards mortgage bonds.
“Freddie Mac raised its гарантийные сборы three years ago, so they are raking in money. It has essentially become an extra tax on buyers, so if they won’t lower those fees, then why not use that money to help bring mortgage rates down?” Lamacchia said.
Lowering credit card interest
Another initiative mentioned by Trump is the proposal to cap credit card interest rates at 10% for one year, brokerage leaders were skeptical of the relief it could potentially offer prospective homebuyers.
“There are certainly prospective first-time buyers out there who are financially strained and do have credit card debt at a 30% interest rate, so if you lower that down to 10%, that could be some extra cash in their pocket each month. They could use that money to save for a downpayment, but we don’t know if that will happen,” Pappas said. “We’ll have to wait and see if there really is a correlation showing that credit card debt is stopping people from purchasing homes.”
Bess Freedman, the CEO of Браун Харрис Стивенс, shared a similar view, writing in an email: “His plan to cap credit card rates at 10% for a year could help somewhat relieve financial constraints temporarily but it will have to clear Congress. Still, so many ifs.”
Leaders question the size of the impact
While real estate executives are happy to see housing issues discussed on the global stage, they questioned the size of the impact these measures could potentially have on housing affordability.
“It’s important to be realistic about the scope of these measures,” Kelly wrote. “The core affordability and inventory challenges before us have been building for more than a decade due to chronically underbuilt supply, rising development and infrastructure costs and wage growth that hasn’t kept pace with housing costs. There is no single policy lever that can unwind those forces overnight. Bottom line: The immediate measures may provide some slight relief, but true healing of the underlying issues will simply take time and require a longer term commitment and view beyond our election cycles.”
Due to this, brokerage leaders told HousingWire that they would love to see an increased focus on changing “outdated” local zoning rules, and for the administration to pay attention to how tariffs and immigration reform are impacting housing construction.
“We need more homes to increase supply, and these acts have certainly hurt homebuilders,” Freedman wrote.
While the executives would all like to see improvements in housing affordability, many noted that Trump’s comments about being careful not to hurt existing homeowners by bringing prices down, were accurate.
“He is right about that,” Lamacchia said. “You don’t want to put people upside down or put mortgages under water.”
English