Trump's plans for the housing market

Summary

Summary of "Trump's Plans for the Housing Market" Episode of The Indicator from Planet Money

Release Date: November 26, 2024
Host: Darian Woods
Guest: NPR's Laurel Wamsley

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Introduction

In this episode of The Indicator from Planet Money, host Darian Woods delves into the pressing issue of high housing costs across America and examines the plans proposed by then-President Donald Trump to address this challenge. Joining the discussion is NPR's housing correspondent, Laurel Wamsley, who provides an in-depth analysis of Trump's strategies aimed at making housing more affordable for American families.

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The Current State of the Housing Market

Darian Woods opens the discussion by highlighting the alarming statistics surrounding housing affordability:

"[Families now need to earn an estimated $110,000 a year to afford a typical home, meaning 65% of households are locked out of buying.]" (04:04)

This sets the stage for exploring the multifaceted approach President-elect Trump intends to take to alleviate this burden.

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Trump’s Proposed Policies to Address Housing Affordability

Laurel Wamsley outlines Trump's dual strategy focusing on increasing housing supply and boosting demand to make homes more affordable.

A. Increasing Supply

1. Deregulation

   Trump emphasizes the need to:

   "Eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half." (07:35)

   Analysis: Wamsley notes the vagueness of Trump's plans regarding which specific regulations will be reduced. Potential areas include energy efficiency standards or environmental protections. However, she points out that much of the regulatory burden lies at the state and local levels, which may limit the federal administration's ability to enact meaningful changes.

2. Opening Federal Land for Housing Development

   Trump proposes utilizing federal lands to build new housing:

   "We will open some portions of federal land to housing." (07:23)

   Analysis: While this initiative aims to increase housing stock, Wamsley cautions that many federal lands earmarked for development are remote and not near major job centers, potentially limiting their impact on overall housing affordability. Additionally, the required infrastructure investments could offset some of the anticipated cost reductions.

B. Increasing Demand

1. Reducing Mortgage Rates by Slashing Inflation

   Trump claims:

   "As inflation is tamed, interest rates will dramatically fall. They'll be down." (06:17)

   Analysis: Wamsley expresses skepticism about this promise, explaining that mortgage rates are influenced by broader economic factors beyond presidential control. The Federal Reserve primarily sets interest rates, and current inflation trends have not effectively reduced mortgage costs. Moreover, Trump's proposed economic policies may inadvertently be inflationary, potentially counteracting his goals.

2. Tax Incentives and Support for First-Time Homebuyers

   The Republican platform includes:

   "Promoting home ownership through tax incentives and supporting first-time homebuyers." (04:22)

   Analysis: Details on these incentives remain vague. If aimed at down payment assistance, economists warn that while they may help some individuals, they could also increase demand and potentially drive up prices. The lack of specificity makes it challenging to assess the true impact of these measures.

C. Immigration Policy and Its Impact on Housing

Trump connects housing affordability to immigration by proposing mass deportations of undocumented immigrants:

"Mass deportations will help address the housing shortage." (09:25)

Analysis: Wamsley references economists who argue that undocumented immigrants are not the primary drivers of housing costs. Many immigrants double up housing and are renters, so removing them may not significantly free up housing units. Furthermore, undocumented immigrants constitute a substantial portion of the construction workforce. Their removal could disrupt the homebuilding industry, potentially exacerbating housing shortages and increasing construction costs.

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Potential Impacts and Challenges

Wamsley highlights several challenges associated with Trump's housing policies:

• Regulatory Cuts: Without clear targets, deregulation efforts may have limited effect, especially if most regulations are managed at state and local levels.

• Federal Land Development: Building on remote federal lands may not effectively alleviate housing shortages in high-demand areas and could require costly infrastructure development.

• Mortgage Rate Reduction: Inflation control is complex and not directly within presidential purview. Attempts to lower mortgage rates through broader economic policies may face significant hurdles.

• Immigration Enforcement: Disruptions in the construction workforce could hinder new housing projects, counteracting supply-side initiatives.

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Additional Policies to Watch

Beyond the primary housing strategies, Trump plans to implement tariffs on foreign-made building materials:

"Slap tariffs upwards of 10% or 20% on foreign-made products, including building materials like lumber and air conditioners." (10:48)

Analysis: Wamsley warns that these tariffs are likely to increase the cost of construction materials, thereby raising the overall cost of building new homes. These higher costs would ultimately be passed on to homebuyers, potentially negating the affordability improvements Trump's policies intend to achieve.

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Conclusion

The episode concludes with Laurel Wamsley providing a critical perspective on Trump's housing plans. While the administration's focus on both increasing supply and demand addresses the multifaceted nature of housing affordability, significant uncertainties and potential unintended consequences could undermine these efforts. The effectiveness of deregulation, the practicality of federal land development, the feasibility of reducing mortgage rates, and the impact of immigration policies all present substantial challenges that will require careful consideration and nuanced implementation.

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This summary encapsulates the key discussions, insights, and conclusions from the episode, providing a comprehensive overview for listeners seeking to understand Trump's proposed housing market strategies.

Transcript

[Darian Woods]

Hey, it's Darian Woods, Waylon Wong and Adrian Ma. Before we get to the show today, we want to take a moment to talk about what makes the indicator and everything you hear on NPR special.

[Waylon Wong]

And because it's the indicator, we're going to have some fun and do it as a little poem.

[Adrian Ma]

Adrian and I have not heard this, so take it away. Darian.

[Waylon Wong]

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[Adrian Ma]

Wow, Robert Frost reincarnated.

[Waylon Wong]

Well, you know, there's two roads ahead. One is donating to NPR and one isn't. Choose the other one.

[Adrian Ma]

So, yes, it is because of you that NPR can do this work and the indicator can come to you every weekday to explain what's happening in the economy, in business, at work and at home.

[Darian Woods]

If you already support us, whether it's through NPR or donating to your local station, thank you. If you haven't taken the leap yet, now is a great time because Giving Tuesday is almost here with npr, you get to hear this and other NPR shows without sponsor messages. And there are other perks, too, like bonus episodes and discounts at the NPR shop.

[Waylon Wong]

To learn more, just go to plus.NPR.org or you can always make a gift at donate.NPR.org thank you.

[Laurel Wamsley]

NPR.

[Darian Woods]

Across America, millions of people are feeling the burden of high housing costs. And during his campaign, President elect Donald Trump promised to do something about that. But what exactly is that something? Today on the show, NPR's Laurel Wamsley, who covers housing, explains Trump's ideas for the housing market. That's coming up after the break.

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[Laurel Wamsley]

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[Darian Woods]

Laurel Wamsley, what is up?

[Laurel Wamsley]

Hey, Adrian.

[Darian Woods]

Laurel, you cover housing as one of your beats for npr. So thank you so much for coming on the indicator to break down what Trump's housing plans are for us.

[Laurel Wamsley]

Yeah, thanks for having me. It's a really important topic. So glad to be here.

[Darian Woods]

Just to set the table, back in September, Donald Trump gave this speech at the Economic Club of New York, and one of the things he talked about is housing.

[Donald Trump]

Families now need to earn an estimated $110,000 a year to afford a typical home, meaning 65% of households are locked out of buying.

[Darian Woods]

So for a lot of people, the housing market is unaffordable right now. What does Trump say he wants to do about this?

[Laurel Wamsley]

Yeah. So some of Trump's ideas are more focused on increasing the housing supply in the country and some of them are more focused on building demand, which means basically making housing more affordable. So on the supply side, two things that he's talked about a lot, one is deregulation, cutting unnecessary regulations and red tape that raise housing costs. And the other thing is opening some portions of federal land to housing, to building new housing on federal land. Now, on the demand side, he's talked about reducing mortgage rates by, quote, slashing inflation. And the other thing that has come up a little bit is promoting home ownership through tax incentives and supporting first time homebuyers. And then another idea that he has connected to housing is his immigration policy. So he's talked a lot about deporting immigrants who are in the country illegally and that would end up having effects to both supply and demand.

[Darian Woods]

Okay, so let's go through these one at a time and just unpack a little bit. And maybe working backwards, we could start with the demand side of the equation. So Republicans in their platform have called for tax incentives and support for first time homebuyers. Any details yet on what this would look like under a Trump administration?

[Laurel Wamsley]

Not really. It was in the platform, but it isn't something that Trump has really talked about very much at all. So it's really not clear what the plan is, what sort of incentives they're talking about. If the idea is down payment assistance, then it's not clear that that would really bring down housing costs, because many economists warn that incentives like that can sort of juice demand by giving more buyers money and bringing more buyers into the market. But it can also provide some really useful assistance that helps some people buy a home when they otherwise couldn't.

[Darian Woods]

And the other piece that Republicans have talked about doing is, quote, slashing inflation. And Trump says that will help make mortgage rates more affordable.

[Donald Trump]

Quickly, as soon as I get to office, we will make housing much more affordable. As inflation is tamed, interest rates will dramatically fall. They'll be down.

[Darian Woods]

So what do you think Trump is saying here?

[Laurel Wamsley]

Yeah, well, I think it's one of those cases where it's easier said than done. You know, mortgage rates are still pretty high. And, you know, if they were super easy to bring down without causing other consequences for the economy, you know, I think probably the Biden administration, you know, would have already done that. But that's really not how it works. I mean, the president doesn't set mortgage rates and nor does the Fed. Inflation has already come down a lot, but it hasn't really brought down mortgage rates. And there's also concern that the broader economic policies that Trump is proposing will be inflationary and that that won't help bring down mortgage costs either.

[Darian Woods]

So I guess those promises still a little bit hazy. Trump has been a bit more explicit on his ideas for increasing housing supply. So let's talk about those. One of them is a promise to cut regulations.

[Donald Trump]

We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half. We think we can do that. The regulations alone cost 30%.

[Darian Woods]

Regulations, Laura, what kind of regulations is Trump talking about here and would cutting them actually help?

[Laurel Wamsley]

He has been very vague about this, and I'm not sure we know exactly what he means. It could mean energy efficiency requirements, or it could be environmental regulations. And then the other thing that's important to mention here is that there is red tape. There is regulation in building homes, but much of that regulation is at the state and local level. And so a lot that adds to that cost. There is probably not stuff that Trump is directly going to address himself.

[Darian Woods]

What about this idea that Trump has also proposed about opening up portions of federal land to large scale housing development?

[Laurel Wamsley]

This is an idea that Trump talked about on the campaign Trail a lot. And, you know, I don't think he's talking about, you know, filling our national parks with new tracts of housing. But what I think he means there.

[Darian Woods]

Won'T be a new apartment building next to a geyser.

[Laurel Wamsley]

I mean, I. I'm going to say I hope not. You know, I think the idea here, and this has had some bipartisan support, is that there's all these federal lands, you know, and this is more like land probably that's owned by the Bureau of Land Management. For instance, some land near Las Vegas, some land near Phoen. These are places that have seen housing costs go up really significantly pretty quickly. And building new housing would add to the supply and could bring housing costs down. But there are reasons to believe that this might be not some big slam dunk that's going to really affect housing prices across the country, namely that much of these federal lands aren't, well, located near job centers where people want to live. And also that a lot of these lands are pretty remote. And to build out there is going to require a lot of money towards infrastructure that is really going to increase the cost of building out there.

[Darian Woods]

Finally, Trump has promised that his administration will commence mass deportations of undocumented immigrants when he takes office. And he has claimed that this would also help address the housing shortage. What has your reporting found about this claim?

[Laurel Wamsley]

What I heard from economists is that, you know, there is some underlying supply and demand question here. They told me that immigrants are not the main thing driving up housing costs, but there is some effect, as there is with any population growth. How much an effect this really has is unclear, because a lot of undocumented immigrants to the country, you know, double up in housing, and it appears that most are renters. So if they are, you know, removed from that housing, it's not clear how many housing units that would actually vacate. And there's some debate about, you know, the number of immigrants that we're talking about here. But this is not the primary factor that's driving up housing prices. And then there could also be a big effect on the supply portion of this, which is that undocumented immigrants make up an estimated quarter of construction workers in this country. So if all these folks are suddenly, you know, either deported or worried about being deported and feel like they can't show up to work, then that's going to have a huge effect on the home building industry, and it could cause a lot of upheaval there. And it's very reasonable to expect that that would raise prices for building new homes.

[Darian Woods]

So looking ahead, are there any other policies you'll be watching for? I guess a potential impact on housing?

[Laurel Wamsley]

Yeah. Well, the other thing that Trump has obviously talked a lot about on the campaign TR is tariffs. He wants to slap tariffs upwards of 10% or 20% on foreign made products and that includes building materials and all kinds of things that go into new homes like garage doors, air conditioners, just the lumber to build the homes themselves. So, you know, I think we can expect that if those tariffs, you know, come to pass, then that is just going to raise the cost of construction and the end of these items in homes and that cost will be passed along to home buyers.

[Darian Woods]

NPR's Laurel Wamsley, thank you so much for breaking down what I imagine will be an evolving policy picture for Trump's approach to the housing market.

[Laurel Wamsley]

Thanks, Adrian.

[Darian Woods]

This episode was produced by Angel Carreras and engineered by Jimmy Keighley. It was fact checked by Sierra Juarez Cake and Cannon edits the show and the indicator is a production of npr.

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[Laurel Wamsley]

For the following message come from LinkedIn Ads. With LinkedIn Ads, you can reach professionals relevant to your business. Target them by job title, industry company and more by launching your next campaign with a free $100 ad credit at LinkedIn.com results, terms and conditions apply. This message comes from NPR sponsor Mint Mobile. From the gas pump to the grocery store, inflation is everywhere. So Mint Mobile is offering premium wireless starting at just $15 a month. To get your new phone plan for just $15, go to mintmobile.com switch.