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TRUMP vs. HARRIS Housing Proposals.
The U.S. housing market has been a focal point of economic discussion, particularly in recent years, as large institutional investors have increased their presence. With the 2024 presidential race highlighting housing policies from candidates like Kamala Harris and Donald J. Trump, understanding the role of major players such as BlackRock, Blackstone, and other large investors in the housing market is more critical than ever.
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Institutional Ownership in the Single-Family Home Market
Contrary to popular belief, the percentage of single-family homes owned by large institutional investors, including BlackRock and Blackstone, remains relatively small. Collectively, these institutional investors own approximately 1-2% of all single-family homes in the United States. With an estimated 80 million single-family homes nationwide, this small percentage reflects that individual homeowners and smaller investors still own most single-family homes.
Through its subsidiary Invitation Homes, Blackstone is one of the more prominent players in the single-family rental market, owning tens of thousands of properties. However, even with this substantial portfolio, their ownership still represents a minimal portion of the overall single-family housing market. BlackRock, often cited in discussions about institutional ownership, primarily invests through funds rather than directly owning many single-family homes.
Corporate Ownership in the Multifamily Sector
The influence of large investors is more pronounced in the multifamily sector. Corporations and institutional investors that own more than 100 units control approximately 40-50% of all multifamily rental units in the United States. This includes large apartment complexes and other multifamily properties, where economies of scale make it more feasible for large investors to operate.
In contrast to the single-family market, where individual ownership dominates, institutional investors have concentrated their resources in the multifamily sector, significantly impacting the rental landscape in urban areas.
Housing Policies: Kamala Harris vs. Donald J. Trump (2024)
Housing policy has become a critical issue as we approach the 2024 presidential election. Kamala Harris and Donald Trump present contrasting approaches to addressing the housing crisis, each with potential economic impacts, inflationary pressures, and unintended consequences.
Kamala Harris’s Housing Policy Proposals:
- Building 3 Million New Homes: Harris’s plan to construct 3 million new homes aims to alleviate the affordable housing crisis. This could significantly increase housing supply, particularly in high-demand areas, potentially lowering or stabilizing home prices. However, large-scale construction could lead to short-term inflationary pressures in the construction industry due to increased demand for labor and materials. Additionally, if funding comes from increased taxes, this could contribute to broader economic inflation.
Projected Impact on Home Prices and Rents: Initially, the influx of new housing could stabilize or even lower home prices, particularly in oversaturated markets. However, if construction lags behind demand or if interest rates remain high, prices could continue to rise. Rents might stabilize or decrease slightly in areas where new housing alleviates supply shortages, but significant rent reductions are likely only possible with broader market shifts.
- Down Payment Assistance: Harris’s proposal for a $25,000 down payment assistance program is designed to make homeownership more accessible for low- and middle-income families. This could boost demand in the housing market, particularly among first-time buyers, potentially driving up home prices if the supply does not keep pace with the increased demand.
Projected Impact on Home Prices and Rents: Increased demand fueled by down payment assistance could lead to higher home prices, particularly in markets with limited housing stock. This could also lead to increased rents as some potential buyers are priced out of the market, opting to rent instead.
- Cracking Down on Corporate Landlords: Stricter regulations on corporate landlords could protect tenants from rent hikes but might also discourage investment in rental housing. This could reduce the availability of rental units, leading to increased rents over time as supply tightens.
Projected Impact on Home Prices and Rents: Limiting the influence of corporate landlords could stabilize or slightly decrease rents in the short term, but overregulation might reduce rental housing supply, driving rents higher in the long term. Home prices may remain unaffected directly by this policy but could be influenced by broader market dynamics.
- Rent Control and Tenant Protections: Harris supports rent control measures to protect tenants from rapid rent increases. While this could stabilize housing costs for renters, it might also deter developers from investing in new rental properties, leading to a decrease in the overall housing supply.
Projected Impact on Home Prices and Rents: Rent control could lead to lower rent increases for existing tenants, but new developments might become scarce, driving up rents in non-controlled areas. Home prices could see upward pressure as some developers shift focus to single-family homes or other non-controlled property types.
- Government Spending and Debt Impact: Kamala Harris’s proposals, particularly the large-scale construction of affordable housing and the down payment assistance program, would require significant government spending, potentially adding substantially to the national debt. These initiatives are designed to address housing affordability and equity but come with high fiscal costs. The potential for increased inflation due to higher government spending is also critical.
Donald Trump’s Housing Policy Proposals:
- Deregulation to Spur Development: Trump advocates for reducing regulations that stifle housing development. By making it easier and cheaper for developers to build, Trump aims to increase the housing supply, potentially lowering prices. However, rapid deregulation could lead to speculative development, which might increase home prices in the short term as investors buy up available land and properties.
Projected Impact on Home Prices and Rents: Increased supply could lead to lower or stabilized home prices over time, depending on the speed and scale of development. Rents could decrease as more housing becomes available, but this would depend on the location and type of development.
- Opening Federal Lands for Development: Trump’s proposal to open federal lands for private development could increase the supply of affordable housing. However, this strategy might face opposition from environmental groups and local communities concerned about land use.
Projected Impact on Home Prices and Rents: If successful, this policy could lower land costs and, in turn, reduce home prices, particularly in regions with high land prices. Rents could also decrease as new developments increase the supply of rental units.
- Opposition to Rent Control and Zoning Reform: Trump opposes rent control because he believes it exacerbates housing shortages. He supports maintaining traditional single-family zoning laws, which he believes protect the character of suburban neighborhoods. This approach could preserve property values in these areas but might limit the availability of affordable housing in urban centers.
Projected Impact on Home Prices and Rents: By opposing rent control and maintaining zoning laws, Trump’s policies could lead to continued increases in both home prices and rents in high-demand areas. Suburban home values will likely remain stable or increase, while urban rents may continue to rise if supply remains constrained.
- Government Spending and Debt Impact: Donald Trump’s proposals focus on reducing government intervention through deregulation and leveraging private sector development. These policies would likely require less government spending and have a minimal impact on the national debt. In some cases, such as opening federal lands for development, these policies might generate revenue, further reducing any potential fiscal impact.
Impact on Real Estate Agents and Brokers
The proposed policies of both candidates have significant implications for real estate agents and brokers. Kamala Harris’s focus on government intervention, affordable housing, and tenant protections could lead to increased transactions and potential market disruptions, such as price inflation or reduced rental housing supply. Trump’s emphasis on deregulation and free-market solutions might spur development and increase sales but could also maintain housing affordability challenges in high-demand areas.
Real estate professionals must consider how these policies affect their business models, commission structures, and client bases. For instance, increasing homeownership through down payment assistance might bring more first-time buyers into the market. At the same time, deregulation could lead to more development opportunities and greater competition among agents.
Unintended Consequences and Long-Term Considerations
Both Harris’s and Trump’s proposals carry potential unintended consequences. Harris’s policies could lead to higher taxes and increased government spending, with long-term implications for the national deficit. Overregulating corporate landlords might reduce rental housing availability, while rent control could deter new construction.
While promoting development, Trump’s policies could lead to environmental degradation and pushback from local communities. Maintaining traditional zoning laws might protect suburban home values but could perpetuate housing shortages in urban areas.
Additionally, both candidates’ policies have the potential to influence inflation rates. Harris’s government spending could potentially increase inflationary pressures, while Trump’s deregulation might initially lower costs but could lead to speculative bubbles if not carefully managed.
Which Set of Proposals Has the Highest Likelihood of Providing the Most Benefit?
Short-Term Impact:
- Kamala Harris’s proposals might offer more immediate benefits, particularly for renters and first-time homebuyers struggling with affordability. Her focus on equity and targeted assistance could help address systemic issues in the housing market.
Long-Term Impact:
- Donald Trump’s proposals could offer more sustainable benefits over the long term, especially if deregulation significantly increases the housing supply. By reducing barriers to development, his policies might help lower prices and rents, though these benefits may take longer to materialize.
Overall Opinion:
If the goal is to provide immediate relief to those most affected by the housing crisis, Kamala Harris’s proposals seem likely to offer the most direct benefits, particularly in high-demand urban areas. However, these benefits may come with inflation risk and potential reductions in long-term housing supply due to overregulation.
If the goal is to stimulate broader economic growth and increase housing supply over the long term, Donald Trump’s proposals could encourage more development, especially in new construction.
