Already have an account? log in
This article is FREE for you
Create a free account and join institutional investors, analysts and strategists from the world's largest banks
By submitting your email address you agree to receive communication by email
Trump Resorts To Gimmicks To Revive Moribund US Housing
It's a good thing Donald Trump's going to rescue the US housing market by "asking" (Trump doesn't "a
OR, subscribe now for unlimited access
By submitting your email address you agree to receive communication by email
By submitting your email address you agree to receive communication by email
Supply constraint seems less of an issue given rising inventory and months on market. -50bp mortgage rate will, my guess, improve affordability more than it raises prices. But not much. The 20% downpayment hurdle will remain. A renter may get lured into the first-time buyer market, but have they saved up the requiste year’s salary? So look for Trump to “ask” the GSEs to start buying mortgages with higher LTV.
To address supply, look for EOs “directing” states/locals to drop permitting, zoning, etc requirements, to go with the EOs prohibiting institutions from buying houses. Congress is more likely to implement the latter than the former, but the Federal govt can withhold housing funds from states that don’t cooperate. Logically Trump should also cancel tariffs on housing materials and equipment, and deportations of construction workers. Not sure the latter can happen, ICE is out of control.
Reduce mortgage rates and down payments enough, and increase supply enough, and I think Trump can make some progress on housing. Not by Nov 2026. And only until the GSEs get into trouble.
Now talk of eliminating penalty for 401k withdrawals for house purchases. Hope trade in RE forthcoming.
I’m sure some kind of CPS “hope” trade is being cooked up after this week. Agree w/ your outlook and strategy and it would be bewildering to see him actually stack something cohesive together. Also agree that progress would be slow and minimal, but it’s a start. The more H writes about it, the more I’m on the side of it taking a 5 handle on rates to truly open the gates for homebuyers to step in w/ confidence and force.
I doubt Trump ever read about the introduction of mongooses to Hawaii, but I have a feeling we’re going to be learning that lesson repeatedly the next few years (decades?).
In a twisted final chapter to your sugar cane story, Maui no longer has any sugar cane production since 2016 and they are still trying to figure out how to viably repurpose the farmland. The toxic, shuttered sugar mill and mongoose, however, remain.
Instead of having a running economy that bounces around some naturally, some months better, some worse, but long term, a growing economic pie that gives some of us some certainty, what we have is a whack a mole president who keeps busy stopping this, doing that, always bragging. “You are all so well off !” Now it is mortgages. Soon, something new we haven’t even thought of.
I understand how creating artificial “demand” for MBS could lower lending rates, but how sustainable is that? It takes years to bring new housing on-line, and that is only when you have affordable (meaning deported) skilled labor, and inexpensive building supplies. For example, is Canadian lumber still being tariffed, and if so then at what rate?