The 2024 general election matchup is now set in stone. It is time to consider the impact of another Trump or Biden presidency on the 2025 housing market. The housing market has been on a tear since the beginning of the pandemic. We have seen the median sale price of homes rise about 29% since Q2 2020, despite the predictions of many experts along the way. This can be attributed to rising interest rates, inflation, and the cost of materials, yet how have Biden’s policies contributed to this?
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Biden on the Housing Market
When Biden took office in January 2021, the housing market was coming off a huge boom despite the ongoing pandemic. Yet, Biden aimed to ensure low-income Americans could also realize these gains. One of his first significant legislative wins was the Build Back Better Act, which vastly expanded housing vouchers and efforts to build more affordable housing throughout America. It included $25 billion to assist low-income households in making ends meet through vouchers. In addition, it provided $65 billion for maintaining the existing supply of public housing, among other things.
As of late, Biden has continued his efforts to make housing more affordable for all Americans. In his March 7th State of the Union address, the President unveiled his plan to create $5,000 vouchers for first-time home buyers. The President also announced his efforts to give those already in their first home a $10,000 tax credit to sell in favor of moving into a larger home to increase the housing supply. These tax credits, coupled with the possibility of the FED looking to decrease interest rates soon, could continue the housing market in its uproar. At the same time, if left unchecked, these efforts could artificially increase housing costs. With sellers on the market increasing their asking price equal to the vouchers to take advantage of the programs.
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Trump on the Housing Market
Under Trump, the median sale price of homes increased 12%, with the majority of that increase coming during the onset of the pandemic. Throughout his presidency, Trump led many efforts to decrease the HUD budget, despite nearly 75% of Americans who qualified for assistance not receiving any assistance. In terms of affordable housing, Trump led many efforts to allow the expansion of privatization in the sector. At the same time, he advocated for a decrease in affordable housing in the suburbs. He accomplished this by terminating the Obama-era Affirmatively Furthering Fair Housing (AFFH) regulation, which required communities that receive HUD money to prohibit housing discrimination.
In 2017, Trump’s Tax Cuts & Jobs Act, created Opportunity Zones (OZs) to drive private investments in low-income areas in exchange for capital gains tax breaks. 7 years later, many economists have studied these OZs, and have seen that they have resulted in gentrification and a loss of federal tax revenue, with no significant impact on the affordability of areas that qualify. While OZs did not do much to address housing affordability in the market, they remain compelling opportunities for investors. Trump has yet to unveil a comprehensive housing plan for his third run for the presidency, but we should expect it to include a decrease in regulation and an increase in “trickle-down” policies to stimulate the sector.
What to Expect for 2025
With both candidate’s policies and efforts to impact the housing market, there is a clear dichotomy in their future plans. We expect another Biden term to feature continued investments in low-income areas. This would provide everyday Americans greater options to invest in and obtain housing, at the expense of landlords and private companies. Biden plans to accomplish this by using more federal investments to stimulate the housing market.
Another Trump presidency would likely result in more red tape being cut, allowing investors to profit off the continued housing boom. Trump has publicly said he would not allow Fed Chairman Powell to remain in his position and has lobbied that current interest rates are too high. This coupled with his opposition to more affordable housing in the suburbs, should result in less federal interference in the market and more autonomy for states in dealing with their own affordability crises.
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