Dive Brief:
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Nela Richardson, chief economist at real estate brokerage Redfin, has called for a “disruptive federal housing policy” to tackle the deepening housing crisis in the U.S. amid a lack of inventory that is pushing up home prices and rents.
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The current housing climate, she said, poses broader economic challenges than just the need to create more affordable housing properties. Creating livable cities and supporting economic mobility requires investment in infrastructure beyond housing.
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The incoming Trump Administration should look to revamp the industry by scrapping the Mortgage Interest Deduction for high earners and refocusing its impact on lower- and middle-class homeowners in addition to stopping the debasing of Fannie Mae and Freddie Mac, among other initiatives, she said.
Dive Insight:
The U.S. housing market continues to face rising prices, tight inventory, a lack of qualified labor and a tough regulatory environment. The price growth isn't expected to ease anytime soon, with CoreLogic recently forecasting home prices rising 5.3% from August 2016 to August 2017.
One measure aimed at tackling the affordability problem that is gaining traction among cities nationwide is exploring the use of inclusionary zoning along the lines of schemes recently launched in Seattle, Portland, OR, and San Francisco.
Reducing regulatory costs at the local, state and federal levels is another area that is being targeted, as regulations account for nearly one-quarter of a home’s selling price, according to a May report from the National Association of Home Builders.
Although some economists like Richardson have proposed eliminating the Mortgage Interest Deduction due to the belief that it assists those who need it the least, Trump said on the campaign trail that he would look to maintain it as proponents suggest it remains central to housing affordability and availability. Meanwhile, Trump has yet to indicate whether he will back calls by many Republicans to reduce or completely scrap government-backed lenders Fannie Mae and Freddie Mac.
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