US President Donald Trump has made housing affordability a centrepiece of his economic agenda, recently announcing policies designed to increase homeownership.
From restricting institutional investors from buying residential properties to urging “Fannie Mae” and “Freddie Mac” to buy billions in mortgage-backed securities, the administration has leaned on aggressive measures to ease costs.
However, these efforts are unlikely to deliver lasting relief to the housing market, Jake Krimmel, a senior economist at Realtor, told CNBC in an interview this week.
Why Trump’s initiatives are short-term fixes only
Krimmel isn’t particularly excited about Trump’s recently announced housing initiatives as they’re “short run” only – not long-term solutions to the deeper structural issues troubling that market.
According to him, the ban on institutional investors or encouraging government-backed entities to absorb mortgage securities may boost demand in the near-term, but these policies won’t address the fundamental shortage of housing supply.
“I’d love to see more potentially long-run supply side solutions, not just ones to stimulate demand,” the economist explained, adding that without a significant increase in construction, affordability will remain a challenge.
Demand-side policies can temporarily stimulate activity, but they risk inflating prices even further, leaving first-time buyers hardly any better off in the long run.
Federal policy alone won’t solve the crisis
On “Squawk Box”, Jake Krimmel acknowledged the fragmented nature of the US housing market as another major challenge.
“Housing market isn’t a national market,” he argued, pointing to massive differences in affordability and supply-demand dynamics across regions.
Northeast and Midwest – for example – face tight inventories and constrained construction, while the South and West grapple with affordability pressures despite more active building.
Therefore, federal policies alone can’t uniformly resolve these divergent crises.
Local governments must step in with tailored initiatives like zoning reforms, incentives for builders, or “subsidies” for affordable housing projects.
Without regional alignment, national measures risk being blunt instruments that fail to address the nuanced realities of local housing markets.
Rate cuts could unlock inventory – but at a cost
One of President Trump’s most vocal demands has been for lower interest rates, pressuring the Federal Reserve to act.
Mortgage rates currently hover around 6.2%, and a drop to 5.5% could meaningfully shift the market.
“If rates come down, that’s going to push some first-time home buyers into the market for sure,” Krimmel noted.
Lower borrowing costs would ease the “lock-in effect,” encouraging homeowners with higher-rate mortgages to sell and freeing up inventory.
However, the benefits come with risks: cheaper financing could reignite price growth, undermining affordability gains.
So, the net impact would depend on whether increased liquidity outweighs the upward pressure on home values.
All in all, Trump’s housing policies may spark short-term relief, but lasting affordability demands deeper supply-side and local reforms.
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