Trump's plans for the housing market

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1:43Across 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.

2:10This message comes from NPR sponsor Zendesk. Introducing the next generation of AI agents built to deliver resolutions for everyone. With an easy setup that can be completed in minutes, not months, Zendesk AI agents resolve 30 % of interactions instantly, quickly giving your customers what they need. Loved by over 10 ,000 companies, Zendesk AI makes service teams more efficient, businesses run better, and your customers happier. That's the Zendesk AI effect. Find out more at zendesk.com. Laura Wamsley, what is up? Hey, Adrian. Laura, 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.

2:53Yeah, thanks for having me. It's a really important topic, so glad to be here. 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. Families now need to earn an estimated$110 ,000 a year to afford a typical home, meaning 65 percent of households are locked out of buying. So for a lot of people, the housing market is unaffordable right now. What does Trump say he wants to do about this? 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.

3:38So 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 homeownership 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.

4:19And that would end up having effects to both supply and demand. 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? 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.

4:53If 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. 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. Quickly, as soon as I get to office, we will make housing much more affordable.

5:24As inflation is tamed, interest rates will dramatically fall. They'll be down. So what do you think Trump is saying here? 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, I mean, 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.

6:00And 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. 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. 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 percent. Laura, what kind of regulations is Trump talking about here and would cutting them actually help?

6:44He 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, you know, a lot that adds to that cost there is probably not stuff that Trump is directly going to address himself. What about this idea that Trump has also proposed about opening up portions of federal land to large scale housing development?

7:20This 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— So not like there won't be a new apartment building next to a geyser. I mean, 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 Phoenix. These are places that have seen housing costs go up really significantly pretty quickly.

7:57And building new housing, you know, would add to the supply and could bring housing costs down. But there are reasons to believe that this might be, you know, not some big slam dunk that's going to really affect housing prices across the country. Namely that, you know, 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 acquire a lot of money towards infrastructure that is really going to increase the cost of building out there. — Finally, Trump has promised that his administration will commence mass deportations of undocumented immigrants when he takes office.

8:35And he has claimed that this would also help address the housing shortage. What has your reporting found about this claim? — 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.

9:12And 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.

9:44So looking ahead, are there any other policies you'll be watching for, I guess, a potential impact on housing? Yeah. Well, the other thing that Trump has obviously talked a lot about on the campaign trail is tariffs. He wants to slap tariffs upwards of 10 percent or 20 percent 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.

10:22And that cost will be passed along to homebuyers. 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. Thanks, Adrian. This episode was produced by Angel Carreras and engineered by Jimmy Keeley. It was fact-checked by Sierra Juarez. Cake and Cannon edits the show and the Indicators, a production of NPR.