President Donald Trump's housing affordability initiative is discovering what economists have known all along: you can't make housing cheaper without making it, well, cheaper. And that creates a problem when millions of voters are current homeowners.
Six weeks after the White House announced what it called "some of the most aggressive housing reform plans in American history," the rollout has hit significant roadblocks. Congress isn't cooperating, the financial sector is pushing back, and perhaps most tellingly, Trump himself appears conflicted about the whole thing.
At a cabinet meeting last Thursday, the President laid out the tension directly: "We're not going to destroy the value of their homes so somebody who didn't work very hard can buy a home." Translation: lowering home prices to help aspiring buyers means current homeowners watch their biggest asset shrink in value. That's not exactly a winning midterm election message.
The Political Math Isn't Adding Up
According to Bloomberg, public sentiment reflects growing frustration with the administration's handling of cost-of-living issues. A January CNN-SSRS poll found that 64% of respondents don't think Trump has done enough to lower the price of everyday goods.
Housing affordability was supposed to be a centerpiece of Trump's messaging ahead of November's midterm elections. Instead, he's been notably quiet about these proposals during public appearances and has even thrown cold water on some of his own administration's ideas.
Take National Economic Council Director Kevin Hassett's proposal to let workers use tax-advantaged accounts for down payments. Trump's assessment? "I'm not a huge fan—other people like it." Not exactly a ringing endorsement from the boss.
What's Actually Moving Forward
Despite the hesitation, the administration is proceeding with at least one major initiative: a plan for Fannie Mae and Freddie Mac to purchase up to $200 billion in mortgage bonds, which could potentially push mortgage rates lower. Of course, this comes as mortgage rates have recently surged, complicating the affordability picture even further.
The resistance to these housing plans could prove consequential for the midterm elections. When your base includes both aspiring homebuyers struggling with affordability and current homeowners protective of their property values, threading that needle becomes nearly impossible. How this plays out may well influence voter decisions come November.
