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Last week the spotlight was on US Housing at the World Economic Forum at Davos, Switzerland. This year had a record number of top political VIP’s and heads of state. So, what was discussed?

The Trump administration is getting laser-focused on alleviating the affordability crisis raging in housing. News Flash: It turns out when you put the market on steroids with 3% mortgage rates + unprecedented quantitative easing bond purchasing (2020-2022), then proceed to jack mortgage rates up to 7-8% for a sustained amount of time it leads to some adverse housing outcomes. Thanks, Fed. 🫠

Anyways, the housing market, which makes up 15-18% of the US GDP (US Bureau of Economic Analysis) is vitally important to the national economy and thus credibility of the American economy worldwide.

So, what were the policies that President Trump was proposing? 👇 (Spoiler: Some of these, I think, are duds, some are phenomenal ideas that need implemented.)

Trump emphasized that “America will not become a nation of renters” and pushed a policy to restrict large institutional investors from buying single-family homes, arguing this would reduce competition for regular homebuyers and help affordability. He signed an executive order directing agencies to define and limit such purchases, and has asked Congress to codify the restrictions into law.

My take: This will do absolutely nothing to ease affordability, at least in Central Indiana. There are simply not enough homes in Central Indiana owned by institutional investors for this to make enough of difference. However, in some places this may make a difference. According to some sources, in Atlanta ~25% of single-family rentals are owned by institutional investors. This is not total volume of homes, just SFR’s. Most believe the number is 2-4% of homes nationally are owned by institutional investors. Source: Globe.St.

BTW— I am not a “fan” of institutional investors owning homes, it’s just overblown a bit as by far and away, most landlords are mom-and-pop that own between 1-5 homes. Single family rentals have an important use-case in our market as many families DO want to rent a home.

He reiterated plans — already underway before Davos — for government-backed entities like Fannie Mae and Freddie Mac to buy up to $200 billion in mortgage bonds to help drive lower mortgage rates. Trump highlighted that this was already contributing to mortgage rates falling.

My take: I’m honestly not qualified in bond-market analysis enough to have a proper “take.” According to HousingWire, this is not enough volume of bond-buying to bring home affordability down considerably, but it’s a good start. At least we are reversing the quantitative tightening that was happening (bond-selling).

As part of broader cost-of-living and housing affordability talk, Trump proposed capping credit card interest rates at 10% for one year to help Americans save more toward a down payment. He framed this as part of making homeownership reachable again.

My take: Credit card debt is a large reason, especially in lower income brackets, that folks cannot get qualified for a home. This is a segment of the population that owns virtually no assets, and desperately could benefit from homeownership.

He has suggested allowing workers to use some of their 401(k) retirement savings to make a down payment on a home, aiming to help first-time buyers get into the market. Details on implementation are still being worked on and would likely involve legislative action.

My take: From a practical approach, I think this sounds more sexy than it is, but I do like the effort here… The downpayment is not always the reason folks cannot own a home, especially when there are 3-5% downpayment options for first time homeowners. More often it is the monthly PITI payment.

While Trump spoke to housing affordability concerns and repeated familiar themes (homeownership as an ideal, critique of institutional buying), reporting suggests he did not unveil several new detailed programs on-stage — some were referenced via executive actions taken earlier or near Davos rather than as fully fleshed plans released there.

My take: I think President Trump is hitting on a hotbed topic as he gears up for mid-term elections. I think he’s doing some strategic political positioning here and doing some test-floating these ideas.

Regardless, I am happy that US housing policy & the unaffordability crisis is coming into the main-line narrative of the media.

You guys, I certainly don’t have all the solutions, and it sounds like neither does the current administration.

What’s important is 1. Recognizing there is a problem, and a large one at that. For decades, America was a place that anyone who worked hard could own their own dirt & pursue the American Dream. That dream is dying, and fast. And it feels like a certain type of America is dying with it.

2. Generating & discussing new ideas with an open-mind, in a non-partisan way. This is not a Democrat or Republican issue. Both sides value hard-work, ownership, and personal wealth. Let’s not make this partisan, when it really isn’t.

The Reality: What we have always done is no longer working. Homes cost 7x the Median Income. In 1980 this was 2x. At one point you could buy a home in cash if you saved your entire income. Hell, many of the RE investors I network with remind me that their first duplexes were $25-60K in Fountain Square when they bought them. That’s laughable to consider happening now.

The amount of first-time homeowners our team tours homes with… We see first-hand their discouragement at what they’re able to afford in the current marketplace. It’s sad. The rates are too high. And they’re not even that high. That’s a problem.

There’s a lot more to discuss in terms of potential solutions, but in short, the thing I will leave you with is this — None of the above proposals will solve housing. We must approach this with Fundamentals — Supply & Demand.

We must, MUST make it easier to build new homes. Preferably that’s not just the institutional home-builders doing all the building. Those things are leveraged to the hilt.

Bring back the “granny-flats”. Why is it nearly impossible to build an ADU (additional-dwelling unit) on your own property? The regulation & NIMBY-ist zoning policies must end if we want to grassroots build our way out of this.

House hacking truly is one way to incentivize more folks to offer housing. And a good one at that. Feds: Keep allowing folks to buy multi-units with FHA / Conventional loans, keep adding incentives to use rental income towards personal income. This is what makes our market special & achievable for many.

So why don’t we take a look at some potential deals? ….

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