President Trump said in one conference in Davos, SwitzerlandIt will promote home ownership in the U.S. by encouraging lower mortgage rates, limiting the hoarding of residential real estate by institutional investors and curbing credit card costs.
Speaking at the World Economic Forum on Wednesday, Mr Trump described home ownership as “a symbol of health and strength”, which he believed to be a symbol. executive order this week with the goal of preventing Wall Street firms from competing with Americans at home.
However, he stopped short of detailing how the ban would work, and housing experts said the measures fail to address some of the main drivers behind rising house prices.
“It’s not fair”
In a speech to the annual gathering of world leaders, policymakers and businesses, Mr Trump blamed institutional investors for driving up house prices for Americans, buying hundreds of thousands of properties for investment purposes.
“Houses are built for people, not corporations,” Mr. Trump said. “It’s not fair to the public. They can’t afford to buy a house.”
His proposed ban would limit future purchases of single-family homes by large housing investors, such as hedge funds and real estate investment trusts, but would not force them to sell their existing properties. The plan would need congressional approval before it could take effect.
But Jina Yoon, chief alternative investment strategist at LPL Financial, pointed out that the proposal only applies to existing homes and excludes newly built homes, allowing some companies to continue amassing properties.
“This allows institutional investors to shift their capital into rental construction projects, which can really accelerate further development of the rental community owned and managed by large institutional investors,” he said in an email. “And there are far more structural factors driving home prices and affordability issues than just the share of homes owned by institutional investors, such as chronic undersupply, zoning restrictions, income and mortgage costs.”
In the U.S., large investors account for roughly 1% of the total single-family housing stock, according to an August analysis by researchers at the American Enterprise Institute, a nonpartisan think tank. However, the investigation by the Government Accountability Office the shows Even modest levels of institutional investment in local housing markets can drive home prices higher, especially in communities with a high concentration of investor-owned properties.
Shamus Roller, executive director of the nonprofit National Housing Law Project, said the plans the Trump administration has released so far to address housing affordability do not take into account the complexities of the housing market.
“Given how big the problem is across the country, it deserves more attention and thought than it’s been given,” he told CBS News.
Specifically, Roller pointed to a shortage of homes for sale, saying new tariffs on imported US home building materials have driven up costs and the Trump administration’s crackdown on immigration has led to labor shortages among construction companies.
Lower mortgage rates
Mr. Trump said on Wednesday that his policies to ease housing prices are paying off, pointing to mortgage rates this month. dropping to a three-year low after ordering the federal government to buy $200 billion worth of mortgage securities.
The President has said that he can take other measures to reduce the cost of housing loans, but he added that he does not intend to do so, because he wants to protect the owners of existing houses.
“If I really wanted to crash the housing market, I could do it so fast that people would buy houses,” he said.
The drop in mortgage rates to just over 6% has encouraged more home buying and refinancing activity. Freddie Mac.
Analysts at Morgan Stanley estimate that if the government bought $200 billion in mortgage-backed securities, home loan costs would fall by 0.15%.
“While any decline in mortgage rates is helpful, the standalone impact of this move on our numbers is small,” analysts at the investment bank said in a report.
Falling mortgage rates risk pushing home prices higher as more buyers enter the market, according to housing experts.
Credit card interest rate limit
President Trump said another administration plan to help struggling Americans get back on their financial footing is limiting credit cards interest rates at 10% for one year — It would also promote housing affordability.
“This will help millions of Americans save for a home,” Mr. Trump said, adding that rising credit card debt is preventing many Americans from saving for a down payment.
The banking industry has opposed the cap, saying it will limit consumers’ access to credit and steer them toward riskier loan products.