President Trump recently addressed the housing affordability crisis, a top concern for voters, but not in the way many first-time buyers might have expected. At a cabinet meeting, he stated, “I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes.”
This position highlights a long-standing tension in U.S. housing policy: protecting the investments of existing homeowners while making ownership attainable for new buyers. “The desire to protect the investments of existing homeowners while making ownership more attainable for first-time buyers is a conundrum that has flummoxed policymakers for decades,” the article notes.
Economists widely agree that the U.S. faces an acute housing shortage that has pushed both home prices and rents higher. “The remedy, they argue, is to focus on policies that increase the supply of housing, which should tame rising prices by bringing supply in line with demand,” the report states.
The Post-Pandemic Housing Surge
Since the Covid-19 pandemic, home prices have surged about 50 percent, driving frustration with the cost of living, especially among younger Americans. A New York Times/Siena poll found that “more than half of voters under 30 named housing as the thing they worried most about being able to afford.” Meanwhile, two-thirds of American households own their homes, meaning rising prices have simultaneously created trillions in wealth for existing homeowners.
During a speech at the World Economic Forum in Davos, President Trump emphasized this duality: “Every time you make it more and more and more affordable for somebody to buy a house cheaply, you’re actually hurting the value of those houses. And I don’t want to do anything that’s going to hurt the value of people that own a house, who for the first time in their lives are walking around…very proud that their house is worth $500,000, $600,000, $700,000.”
Demand-Side Policies and Their Limits
In his second term, Trump has floated several proposals aimed at making homeownership more attainable, if not outright cheaper. This includes ideas like a 50-year mortgage, which could lower monthly payments but increase the total cost of a home, and allowing buyers to tap retirement accounts for down payments. He also frequently points to lower interest rates as a key solution.
“The common thread in these ideas is that they are ‘demand-side’ policies that aim to make mortgages cheaper or easier to get while doing little to address the underlying housing shortage,” the article notes. Economists estimate the U.S. faces a deficit of between four million and seven million units. As Judge Glock, a senior fellow at the Manhattan Institute, put it, “So far most of what Trump has proposed has been in line with 100 years of the federal government allowing people to layer on more debt.”
A Historical Perspective on Homeownership
The United States has long lionized property ownership. Until the Great Depression, the federal government played a minimal role in helping people purchase homes. Mortgages were typically issued by cooperatives called building and loan associations that required large down payments and shorter repayment periods.
Following the Great Depression, the federal government expanded its role, including through the creation of the Federal Housing Administration, which aimed to prevent foreclosures and widen access to homeownership. Over the decades, additional programs like Veterans Affairs loans and Freddie Mac-backed financing further increased the pool of buyers.
However, price stability became secondary as homes began to be treated as investment vehicles. Economist William A. Fischel observed that in the 1970s, inflation and environmental and zoning restrictions combined to turn homes into “growth stocks,” boosting property values. This set up a conflict: while the federal government sought to expand housing demand, local governments limited supply.
The Rise of ‘Homevoters’ and the NIMBY Dilemma
Fischel coined the term “homevoters” to describe constituents focused on property values. Today, many refer to this as NIMBYism, where homeowners resist development near them. This long-term shortage has been most acute in markets like California, and the aftermath of the Great Recession worsened it. Housing construction fell more than 70 percent from 2005 to 2009 and has yet to recover.
Economists warn that without increasing supply, policies like lower interest rates could further inflate home prices. Edward J. Pinto of the American Enterprise Institute stated, “If you have strong economic growth and homebuilding stays at the same level, lower interest rates are just going to push home prices higher.”
From NIMBY to YIMBY: A Bipartisan Shift
Housing politics are not easily divided along party lines. David Schleicher of Yale Law School notes that in California, “homevoters” from both parties have resisted growth, whether through environmental protections or property tax opposition.
However, the article observes a new trend: bipartisan YIMBYism (“Yes in my backyard”), where cities and states are rolling back restrictions to build more housing. Measures include allowing backyard units and easing limits on multifamily housing. “Now they routinely run on anti-NIMBY platforms and their desire to lower home prices,” says political consultant Jason Elliott.
The Social Costs of Sky-High Home Values
High property values create broader social challenges. Wealthy parents may benefit from home equity, but younger generations struggle to afford nearby housing. Businesses face difficulty finding employees, and luxury developments can exacerbate inequality and homelessness. As Elliott notes, “The problem wasn’t bad enough for voters to be seeking solutions until pretty recently. Now the social costs are too apparent to ignore.
