Her focus to protect consumers is reflected in Oxford Economics analysts adding an estimated $143 billion investment in affordable housing through 2033 if the Democrats were to sweep the White House and both branches of Congress. But the party’s attention on consumers is seen as problematic by some housing experts. At the end of the day, they believe Democrats are creating more demand in an industry that is already struggling to keep up with supply.
“There is going to be a more precise effort to make sure that, as a country, we are building more affordable housing,” said Len Wolfson, a partner at Federal Hall Policy Advisors who served as the acting commissioner for the Federal Housing Administration (FHA) under the Trump administration. “But what has surprised me about the Biden administration is they have consistently diagnosed the problem correctly. They acknowledge it’s a supply problem, but then every single one of their solutions is a new demand-side subsidy.”
For example, during the March 2024 State of the Union address, Biden called for a one-year tax credit of up to $10,000 for middle-class families who sell their starter homes, aiming to help with the lack of homes for sale. But analysts believe that these sellers are likely to become buyers again and will continue to pressure the market. They also say the credit is unlikely to be approved by current members of Congress.
Biden also announced an annual tax credit of $5,000 for two years for middle-class, first-time homebuyers. Meanwhile, Harris has mentioned banning “hidden fees and surprise late charges that banks and other companies use to pay their profits” while pushing to “take on corporate landlords and cap unfair rent increases.”
Some experts agree that it’s natural for the federal government to focus on the demand side of the industry since there’s not much it can do on the supply side. For example, zoning laws, an imperative for building new homes, are local administrative issues. But other experts say there are creative ways to increase supply, such as by making federal lands available and incentivizing builders.
To achieve their goals, Democrats are more likely to expand the housing ecosystem that includes the Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), Fannie Mae, Freddie Mac and Ginnie Mae. This means moving forward with projects to cut insurance premiums, reduce fees and provide new loan products, such as Freddie Mac’s closed-end second mortgages.
Meanwhile, the CFPB — which had a challenge to its funding mechanism rejected in May by the U.S. Supreme Court — would continue its crusade under the leadership of Rohit Chopra against “junk fees,” a controversial topic in the industry. It would also advance its agenda to eliminate medical debt from credit reports and to reduce the cost of credit reports for the mortgage industry.
But the CFPB and other agencies are now under more scrutiny, regardless of who will be in the Oval Office in 2025 and beyond. In June, the Supreme Court overturned the 1984 Chevron precedent, meaning that courts can rely on their interpretation of ambiguous laws while reducing the power of federal agencies to interpret the laws they administer.
“What we’ve seen from Director Chopra is that he has a more expansive view [of the CFPB]. He sees a larger role for the CFPB to fill [gaps in the regulatory space],” said Jason Cave, a principal at Piedmont Risk Advisors LLC who previously held executive roles at the Federal Deposit Insurance Corp. (FDIC) and the FHFA.
According to Cave, a Democratic administration would continue to focus on equitable and sustainable housing, with a “real push on bringing down the cost of loan origination.” In four more years, they could make meaningful changes through, for example, the cost of credit reporting.
If Republicans win
Oxford Economics forecasts that if Donald Trump returns to the White House, it could add between 0.3 and 0.6 percentage points to the core personal consumption expenditures price index — the Fed’s preferred measure of inflation — in late 2027 and early 2028. In response, the Fed would slow or pause rate cuts in 2026 and beyond.
Crucial to this outcome is what happens to several provisions from the Tax Cuts and Jobs Act of 2017 that are scheduled to expire at the end of 2025, barring action from Congress.
Mark Calabria, the former FHFA director under Trump, said that corporate fiscal incentives are quasi-permanent. Still, the individual ones are set to expire, and the Trump administration may make some “tweaks and extensions.” On the fiscal front, Calabria added that Trump’s team is discussing how to stimulate the housing market.
“One of the things Republicans are looking at, on the tax side, is some indexing, perhaps temporarily, of the capital gains relief that you see in homeownership. It hasn’t changed since 1997. And, of course, $500,000 for a couple in 1997 was a lot of money. It’s a lot less now,” Calabria said.
“Both administrations will be looking at tax incentives to reduce lock-in effects in the existing-home sell side,” he added. “You can debate if one is more effective than the other. The Biden side seems to be more tax-credit driven. My sense on the Republican side? It is probably more likely focused on capital gains.”
Industry experts believe that Republicans would aim to strengthen community banks to make construction financing readily available, invest in apprenticeship programs for professions such as plumbers and carpenters, and release some federal lands to build housing. Considering his experience in real estate, some say that Trump would focus on regulatory levers to make it easier for developers to build by cutting red tape.
Regarding Trump’s plans, The Heritage Foundation’s Project 2025 has been labeled as a “wish list.” But Trump and his aides have publicly criticized the proposals, and the group’s director, Paul Dans, resigned in late July.
In the housing space, the conservative road map includes a “reset” at the U.S. Department of Housing and Urban Development (HUD), suggestions for “abolishing” the CFPB and supports increases in FHA’s mortgage insurance premiums. Wolfson, who was at the FHA under Trump, said Republicans support a limited FHA role that “does not encroach on private capital,” so they may discard any rules to further cut premiums and may consider steps to narrow the credit box.
There’s no consensus on releasing the GSEs from federal conservatorship. Some experts believe there are no economic or political incentives. Others say a Republican administration would improve the enterprises’ capital ratios and reduce their shares in the market — scratching programs such as Freddie’s pilot for second mortgages — to attract private investors.
“In a Trump administration, whoever ends up in the FHFA director slot and Treasury secretary, you’d see a return to exploring an exit from conservatorship and recapitalizing the GSEs to have them go back to their pre-2008 status as fully-public companies that were not under conservatorship,” said Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association (MBA).
According to Killmer, releasing the GSEs is “tricky,” could take longer than a four-year term and has implications for the capital markets. One example, according to Cave: “The Fed allows banks to buy GSE mortgage-backed paper and not subject them to the counterparty credit limits because the GSEs are in conservatorship; you have to deal with the Fed on that, because once they are out of conservatorship, big banks would be well in excess of the concentration limits for the GSE debt.”
When considering the watchdog CFPB, a Trump administration would have less “regulation by enforcement,” which is how some observers define Chopra’s style. Notably, however, Trump appointee Kathy Kraninger had about 70 enforcement actions from December 2018 through January 2021, compared to Chopra’s roughly 60 actions since October 2021.
“They are clearly taking on a lot in terms of regulatory proposals now, and I would say the best thing for markets — and therefore also for consumers who are looking for that fair, competitive, transparent marketplace — is consistency, stability and long-term thinking. So, fundamentally, a pendulum swinging back and forth is not good for consumers,” said Kraninger, the former CFPB director and current CEO of the Florida Bankers Association.
Regarding so-called “junk fees,” Kraninger said that “when you have a product that people understand and use, I don’t call that a junk fee.” And on the issue of eliminating medical debt from credit reports, she said that the U.S. “system of credit is unparalleled across the globe, but we’re denigrating that.” According to her, there are issues that need to be addressed, especially in regard to the fairness dynamics of medical debt, but it’s nuanced.
Despite their differing approaches to the housing and mortgage markets, Rood of Impact Capitol doesn’t believe that a second Trump administration would reverse all steps taken by Biden to minorities. He said that’s because Republicans have become more populist and have done a good job of appealing to low- to moderate-income families, as well as minorities and immigrants. At the same time, they don’t hold big corporations in the same high esteem as they used to.
