“Mortgage Rates Might Turn Out to Be Trump’s Achilles’ Heel,” Warns Analyst on Housing Crisis
Photo Credit: Mathew Imaging/Filmmagic
President-elect Donald Trump faces a critical challenge with the U.S. housing crisis, one that voters expect him to resolve but which his proposed policies might worsen, according to a new analysis by Washington Post economics columnist Heather Long.
In her Wednesday column, Long highlighted how the nation’s growing housing crisis poses a major threat to Trump’s popularity, particularly given his promises of economic prosperity. She argued that the president-elect’s proposed measures, including mass deportations, tax cuts, and tariff demands, could exacerbate the issue.
“His housing agenda includes a collection of ideas that could easily backfire,” Long wrote. “Mortgage rates might turn out to be Trump’s Achilles’ heel.” Trump’s campaign rhetoric included a promise to lower mortgage rates to as little as 2 percent. However, mortgage rates are now nearing 7 percent, driven in part by Trump’s election, which caused bond market turbulence as investors anticipated inflation and rising costs for building materials.
Long noted that housing costs hold particular significance for Trump’s voter base. “The housing crisis is real,” she explained. “Not only was it a top issue with voters all over the country, but in the toughest markets, where home prices have often doubled in recent years and inventory remains low, voters swung to Trump.”
The median home price has surged by $100,000 in just four years, reaching $420,000, fueled by a severe shortage of available homes. Long argued that Trump’s proposed economic policies are unlikely to alleviate the crisis and could even worsen it.
“The argument that immigrants caused the housing shortage has been widely debunked,” she wrote. “Even if Trump did conduct mass deportations, that would almost certainly make it more expensive and harder to rapidly build homes, as immigrants make up one-quarter of the workers in the construction industry.”
Other proposed measures, such as loosening bank regulations, releasing rural federal lands for development, and rolling back President Joe Biden’s housing policies, might not address the crisis effectively, Long asserted. She warned that these moves could make affordable housing programs harder to fund and further strain urban housing markets.
“Solving the housing crisis requires lower mortgage rates and building more homes,” Long concluded. “Right now, the bond market is watching every Trump move for signs of inflation and largesse. And so far, that’s what it sees.” With the housing crisis looming large, Trump’s policies are under scrutiny for their potential impact on one of the nation’s most pressing issues.
