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 15th
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
5th.
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