Presidential proposals on housing affordability, like capping institutional ownership, are constrained by more than just politics. Procedural rules in Congress, such as the requirement for budget reconciliation bills to have a significant fiscal impact, can render such initiatives non-permissible, severely limiting the executive's ability to enact them.
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The most powerful voting bloc—homeowners—is financially incentivized to oppose new housing development that would lower prices. This political reality means politicians cannot address housing affordability without alienating their core voters, leading to policy stagnation and an intractable crisis.
The most effective way to lower housing prices is to increase supply. Instead of artificially freezing rents, which discourages investment, policymakers should remove regulations that make building new units difficult. More construction creates more competition, which naturally drives down prices for everyone.
Meaningful affordability cannot be achieved with superficial fixes. It requires long-term, structural solutions: building 5-10 million more homes to address housing costs (40% of CPI), implementing universal healthcare to lower medical expenses, expanding public higher education, and aggressive antitrust enforcement to foster competition.
Political actions like Trump's proposed "Landlord Lockout" target a symptom (Wall Street buying homes) but ignore the root cause of the housing crisis: a critical shortage of supply. The real solution requires a massive, coordinated national effort to build millions of new homes quickly.
Banning firms like Blackstone from buying single-family homes is a poor substitute for deregulation that would increase housing supply. However, it's a politically astute populist move that directly addresses voter anger over wealth inequality and housing affordability, making it a pragmatic if imperfect solution.
A proposed 50-year mortgage, intended to improve housing affordability, is a flawed solution. The extended term means borrowers build equity at a negligible rate, making the financial outcome similar to renting and failing to deliver the key wealth-building benefit of homeownership. It's a demand-side fix for a supply-side problem.
A serious approach to the affordability crisis requires a multi-year strategy targeting the biggest cost drivers: housing (massive supply increase), healthcare (nationalization), and education (income-based tuition), combined with aggressive antitrust enforcement. Piecemeal solutions from either party fail to address the systemic nature of the problem.
While minor policy tweaks like fee adjustments could lower mortgage costs by 10-15 basis points, more transformative changes are being considered. Allowing homeowners to take their existing mortgage to a new home ("portability") could have a much larger impact on housing market liquidity, but implementing such a change retroactively is deemed extremely difficult from a legal perspective.
Politicians at all levels actively restrict housing supply through zoning and other policies. This is not incompetence, but a deliberate strategy to protect and inflate property values, which satisfies the large and reliable homeowner voting bloc, ensuring re-election at the expense of renters and future buyers.
A proposed ban on institutional home buying is less about housing policy and more a major political signal. It indicates a pivot away from propping up asset prices (the K-shaped recovery) towards policies that favor labor and middle-income households, which are seen as more electorally viable.
