As we’ve written about numerous times in the past, there’s a good Donald Trump and a bad Donald Trump. The good Trump is the man who often sees the true root of a problem and is willing to provide an antidote, even if not politically correct. And then there’s the bad Trump, who lets his ego and impulsive negativity step on his own tail, time and time again.
Take, for instance, Trump’s efforts to tackle the nation’s housing problem.
The economy and the housing markets were doing just fine in Trump’s first term. But then, the Covid disaster and left-wing policies instituted by the Biden administration placed rents and homeownership out of reach of a large chunk of the American public.
Trump was quick in his second term to help identify the problems fostering this unaffordability crisis in housing and pledged to put together a plan to fix it. It’s not perfect, but it is helpful.
Point one was placing a curb on the amount of single-family homes that could be gobbled up by huge corporate entities as pure investment properties. By taking these houses off the market, the average Joe and Jill looking for their first home or their retirement nest were in jeopardy.
The bill also provided grants to incentivize the streamlining of construction and the rehabilitation of dilapidated structures.
Trump was also acute enough to realize that Biden‘s open border immigration policy was having an extremely detrimental impact on housing and rents. It’s simple supply and demand. When Biden let in 10 to 20 million newcomers, they had to live somewhere, so they placed additional strain on an already limited housing stock. A recent government report suggests that rent has increased by 20% and housing costs by 30% due to the increased competition from illegal immigrants.
Meanwhile, liberal states have imposed so many zoning and environmental impediments to building new housing that the stock remained stagnant while the demand rose exponentially.
The leftists and socialists fall back on the notion that rent control will solve the problem. But that will likely dissuade any developer from building more housing. The shining example of success is Austin, Texas, which provided a pro-housing policy agenda, and wound up providing wonderful rentals and homes at affordable prices, simply by increasing supply.
Trump also realized that the significant interest rate hikes imposed by the Fed to combat Biden‘s inflation totally distorted the market
The Fed started the problem through its quantitative easing in Obama‘s term, which flooded the market with bonds and artificially lowered interest rates to historically low levels. That’s good in the short term for the many folks who get a new home with a low rate. But it also managed to push up costs, since the lower interest rates allowed the sellers to charge more.
But most damaging is the fact that millions of Americans who bought their starter homes with a sub-3% mortgage were never going to sell that home to move up to a bigger abode if it meant paying a mortgage with a 6.5% rate. This severely limited supply on the Multiple Listing Services, which, in turn, caused these prices to skyrocket.
Trump realizes that the interest rates must come down and the Fed should heed his call. It is true that Trump‘s tariff policies and the conflict in Iran have placed additional inflationary pressures on the system, but, right now, the Fed must acknowledge that the bigger threat to our nation is to tell an entire generation that they will not be able to own a home because interest rates are just too high.
Basically, the Fed made its first mistake by lowering rates too much and then followed up with an additional error by raising them too high and keeping them there. Other nations that are in a far weaker economic situation than the U.S. have interest rates at a much lower level.
So Trump got to work with a bipartisan team in Congress to craft the housing bill that will at least be a first step. It’s the first bill in memory in which Americans saw Democrats, Republicans and the president on the same page. It would have been an ideal opportunity for the president to have a press conference with members of both parties crowing about bipartisan legislation to help lower costs for America.
With the lack of affordability being the number one issue resonating with voters, isn’t it pure common sense that a president would want to be at the forefront of attacking this issue? But Trump‘s impulsiveness and penchant for vengeance once again outweighed what would be good for him politically and the country.
Trump is still ticked off that Congress refused to tie the housing bill to the SAVE Act. We believe that the act is even more important than the housing bill, but for the president not to take a win when it’s right in front of his eyes is political malpractice.
The bill was going to pass anyway, with or without this press conference, but it baffles us as to why the president would not want to take a bow on the implementation of the bill that he helped initiate.