Weather 
President Trump last week proposed two policies aimed at reducing the cost of buying a home, as soaring prices and elevated mortgage rates make homeownership increasingly unattainable for many Americans.
Mr. Trump said he plans to ban large institutional investors from buying single-family homes, and is also directing the federal government to purchase $200 billion in mortgage bonds to drive down mortgage rates for Americans.
“It is one of my many steps in restoring Affordability,” Mr. Trump said in a Jan. 8 social media post of the proposed mortgage debt purchase.
Buying a home has become far more expensive in recent years as home prices have surged, driven by a shortage of affordable housing and, since 2022, rising mortgage rates. But because many of those pressures lie beyond the federal government’s direct control, it’s unclear how much Mr. Trump’s proposals could ultimately lower costs, according to experts.
America’s housing shortage
Mr. Trump’s approach aims to tackle two core issues with the housing market — higher mortgage rates and competition for homes from institutional investors. Yet experts say these strategies will do little to address one of the housing market’s thorniest problems: a shortage of homes for sale.
The supply issue partly reflects years of underbuilding after the 2008 financial crisis, as well as the reluctance of homeowners who locked in ultra-low mortgage rates during the ensuing recession to relinquish their properties.
“There is an undersupply of housing in the U.S., and that will take time to resolve,” Gennadiy Goldberg, head of U.S. rates strategy for TD Securities, told CBS News.
The U.S. would need to build as many as 4 million additional homes beyond the normal pace of construction to address the housing shortage, according to Goldman Sachs.
Janneke Ratcliffe, vice president of housing and communities at the Urban Institute, a nonpartisan think tank, told CBS News that the housing market’s supply challenges could be harder to address.
“Most solutions to create new housing take a long time to come to fruition,” she said.
For example, high land costs make it hard to add to the housing supply. One solution, Ratcliffe said, would be to change local zoning rules so more homes can be squeezed into a given area. Yet such policies are set at the local level, not by the federal government, she noted.
Why lower mortgage rates aren’t a panacea
Because Mr. Trump’s policies address the demand side of the equation, they could inadvertently drive up home prices, Goldberg said. For instance, a decline in mortgage rates could draw more buyers into the market, pushing home prices higher and exacerbating the supply problem.
“If consumers are able to afford more homes because monthly payments are lower, home prices tend to rise more quickly,” the analyst told CBS News. “So simply lowering the cost of buying a home through the mortgage channel isn’t sufficient to fix the problem in the long run.”
Meanwhile, Mr. Trump’s plan to ban big investors, such as Invitation Homes and financial giant Blackstone, from hoovering up single-family homes might have only a limited effect on the market, according to Goldberg. The reason: investors that own at least 100 properties account for only roughly 1% of the total single-family housing stock in the U.S., according to the American Enterprise Institute, a nonpartisan think tank.
“That’s a relatively small impact,” Goldberg said.
Mr. Trump also hasn’t said whether institutional investors would be required to sell the homes they currently own, he pointed out. If those firms are not forced to put those properties on the market, a ban is unlikely to significantly expand the supply of homes, Goldberg said.
Still, Mr. Trump’s policies could make a small difference, some housing market experts said.
“Mortgages will be a little cheaper, and housing will be a little more affordable,” Carl Weinberg, chief economist and managing director of High Frequency Economics, told CBS News, adding that banning institutional investors from scooping up homes could “bring prices down a little.”
Ben Ayres, a senior economist at Nationwide Financial, estimated that the government buying $200 billion in mortgage securities could reduce home loan rates by up to 0.35 percentage points, which could “spur more spending activity.”
The upshot: Meaningful progress will require tackling the shortage of available homes, economists agreed. Unless that issue is addressed, the housing affordability crunch will persist, said Edward Pinto, senior fellow and co-director of the AEI Housing Center at the nonpartisan American Enterprise Institute.
“We need to either activate the existing supply that is underutilized, or take steps to allow the building of new homes,” Pinto said. “We need to come up with supply-side solutions that take effect quickly.”
