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Donald Trump has not yet released specific proposals for housing policy, but based on his previous statements and positions, some likely directions can be predicted. The main challenge in the housing market remains the shortage of affordable homes, which continues to drive rapid price increases. Trump acknowledges this problem and offers two key solutions:
- Simplifying zoning laws and accelerating the approval process for new construction. However, zoning primarily falls under local jurisdiction, meaning federal influence would be limited to federally owned land.
- Allocating federal land for residential development.
However, under Trump’s leadership, large-scale multifamily development in areas traditionally zoned for single-family homes is unlikely. He has consistently opposed such projects, especially in suburban areas, and has pledged to block low-income housing developments in these neighborhoods.
As for demand, Trump focuses less on this aspect but emphasizes immigration’s impact on the housing market. He believes that reducing immigration will lower demand and thus housing prices. However, experts caution that around 30% of the construction workforce consists of immigrants. Reducing immigration could worsen labor shortages, further exacerbating the affordable housing crisis.
Additionally, Trump’s potential economic policies could trigger higher inflation, leading to increased mortgage rates. Another critical factor is the possible privatization of government-backed mortgage agencies Freddie Mac and Fannie Mae. If this process is rushed, it could widen mortgage-backed securities (MBS) spreads, making loans even less affordable.
As a result, Trump’s second-term policies could have mixed effects on the housing market. For now, the only option is to wait and see how events unfold.
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