When Donald Trump begins his second term as President of the United States, he will inherit a housing market grappling with significant challenges. Rising costs have placed an immense burden on American families, with national home prices skyrocketing nearly 40% over the past four years. Meanwhile, persistently high mortgage rates are keeping affordability out of reach for many would-be homeowners.
Trump faces a unique opportunity to tackle this national crisis and implement strategies that could make housing more affordable. By addressing regulatory barriers, leveraging federal resources, and reforming housing policies, his administration could make meaningful progress. Here’s how he might approach the issue.
The Housing Crisis: A National Emergency
Edward Pinto, Co-Director and Senior Fellow at the American Enterprise Institute (AEI) Housing Center, recently emphasized that America’s housing crisis has reached the level of a national emergency. The root cause? A severe shortage of housing. Pinto argues that the federal government, states, and municipalities must collaborate to increase housing supply dramatically.
The AEI estimates that the U.S. could add 18 to 21 million homes over the next decade if specific actions are taken. These efforts could include selling federal lands for residential development, easing zoning restrictions, and increasing density in urban areas. Pinto highlights the urgent need for a coordinated effort to address housing supply shortages that have driven up costs for millions of Americans.
Selling Federal Lands for Residential Development
One proposal Trump has floated is selling federally owned land for residential use. This strategy could unlock vast amounts of space for new housing developments. For instance, if the Bureau of Land Management were to auction off 800 square miles of land across 10 western states, an estimated four million homes could be built.
These developments could include light-touch density projects and livable urban villages that repurpose commercial, industrial, and mixed-use zones for residential purposes. By prioritizing such initiatives, the administration could create affordable housing options for middle- and lower-income families.
Reducing Regulatory Barriers
Regulations at the federal, state, and local levels often impede housing development. Trump’s administration could focus on cutting red tape to accelerate construction timelines and reduce costs for developers. By streamlining permitting processes and encouraging states to adopt more flexible zoning laws, his administration could help facilitate the construction of affordable homes.
Additionally, Trump has expressed support for increasing energy production and expanding logging in national forests. These measures could lower construction costs by reducing the price of building materials, such as lumber.
Addressing Immigration and Its Impact on Housing
Another controversial aspect of Trump’s housing strategy involves immigration. Pinto suggests that increased deportation of undocumented immigrants could alleviate some pressure on the housing market. While this approach is likely to spark debate, it reflects Trump’s broader stance on immigration policy and its economic implications.
Tax Reform and Subsidy Overhaul
Trump’s administration could also consider reforms to existing tax policies. For example, eliminating tax deductions for second homes could redirect resources toward more pressing housing needs. Pinto argues that subsidizing second-home ownership disproportionately benefits wealthier individuals and exacerbates housing inequality.
Furthermore, the Secretary of the Treasury could explore additional tax reforms aimed at leveling the playing field and incentivizing the construction of affordable housing.
Evaluating Subsidized Housing Programs
The effectiveness of current subsidized housing programs is another area ripe for review. Pinto points out that many federal housing initiatives recycle properties repeatedly, pouring funds into repairs without addressing underlying inefficiencies. Programs like New York City’s public housing system require billions in repairs yet fail to deliver long-term solutions.
By directing the Secretary of Housing and Urban Development to evaluate and reform these programs, Trump could ensure that federal resources are used more effectively. This could include shifting funds toward programs that focus on building new affordable units rather than maintaining outdated housing stock.
Conclusion: A Bold Path Forward
Donald Trump’s second term offers an opportunity to address one of America’s most pressing issues—housing affordability. By leveraging federal lands, reducing regulatory barriers, reforming tax policies, and evaluating existing housing programs, his administration could make significant strides in alleviating the housing crisis.
While these proposals are ambitious and some may face political and public opposition, they highlight the need for innovative solutions to a deeply entrenched problem. If implemented effectively, these measures could create millions of affordable homes, stabilize housing costs, and provide relief to countless American families. Housing affordability is not just an economic issue; it is a cornerstone of the American dream, and bold action is needed to make that dream accessible once again.