CNBC - What a Trump Presidency could mean for the housing market

 

CNBC article on what a Trump presidency could affect Housing Affordability.

CNBC Article on Trump could do for Real Estate market

The Highlights: 

“We’re going to open up the tracks of federal land for housing construction said in a Aug 15^th news conference. We desperately need housing for people who can’t afford what’s going on”.

As of mid -2023, there has been a shortage of 4 million homes in the US according to the National Association of Realtors (NAR).

There’s been a small increase in new homes built this year, but its still not enough to meet the high demand for housing…experts say.

Here’s how Trumps policies could affect the housing market:

1) Deregulation to increase affordability.

At the end of his first Presidency, Trump signed an executive order “Eliminating regulator barriers to affordable housing: Federal, State, Local, and Tribal opportunities”.

[Weitz – the author references this, but then provides no details on what this entails. I intend to look up this order and provide a post on it in the coming days..... the report can be found here: HUD Report].

We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half, Trump said in speech at the Economic Club of New York on Sept 5^th.

About 24% of the cost of the single-family home and 41% of the cost of a multifamily homes are directly attributable to regulator costs at local, state and federal level.

2) Impacts on construction workforce

Trump blames rising home prices on a surge of illegal immigration.

“Proposals like mass deportation and tighter border control could impact housing affordability”.

“It's been difficult to recruit native born workers in the construction industry”.

Weitz – this is a shame in my opinion. I’d highly recommend kids getting into the trade industry…. the money can be great especially if you learn the industry and start your own company.

3) Tariffs could hike building costs

Trump proposed a 10% to 20% tariff on all imports…. [which] could push housing costs higher as well as materials for home renovations.

Trump mentioned plans to release federal lands for housing, but federal lands tend to concentrate in rural areas. That does do anything for these densely populated blue areas that really need the most help, Daryl Fairweather, Chief economist at Redfin says.

Weitz – Mr. Fairweather, can the Federal Government dictate the permitting process of city/ local governments? No. These cities are digging their own ‘prospective’ graves. If they make it too burdensome to build in their areas, why would a private developer risk their time/ capital in those areas? These cities need to create their own streamline processing to make it worthwhile for such builds.

WEITZ TAKE

I love the idea of a streamlined version of permitting for every jurisdiction. It’s become so expensive and burdensome in many areas that developers focus the higher value options to maximize their time/ investment return. If the government worked to allow more multi-family options easier, I could see a major shift in where resources and capital are allocated to more projects like that.

That said, as I’ve said many times, we are at a bit of crossroad - I don’t see a magic bullet to ‘cure affordability’, but not lower housing prices in general which will lead to pain for homeowners, developers, investors, and consequently banks, insurance companies, etc. It’s a bit of damned if you do, damned if you don’t situation.

For more information on Snohomish County Commercial Real Estate, feel free to email me at Scott@Weitzcommercial.com or even text me at 206.306.4034. 

Scott Weitz

Weitz Commercial