The Housing Affordability Crisis Reaches Washington
We’re living in one of the most challenging housing markets in modern history. President Trump and his administration are weighing a bold step, declaring a national housing emergency. Home prices are climbing, mortgage rates remain elevated, and renters feel the squeeze as inventory tightens. According to Redfin, home prices rose 1.4% year-over-year in July while sales fell 1.1%. In short, more people are getting priced out of homeownership, and affordability is at the forefront of the national conversation.
If the national housing emergency is declared, it would mark a significant shift in Washington’s approach to housing policy, with potential ripple effects across every corner of the real estate market.
What’s on the Table
Treasury Secretary Scott Bessent recently laid out the administration’s early thinking. While no formal plan has been released, several options are being considered:
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Standardizing zoning and building codes: Federal pressure to override restrictive local zoning laws could open the door to increased housing supply. Investors should pay close attention, because streamlined zoning could accelerate multifamily and mixed-use development opportunities.
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Reducing closing costs: Lower transaction costs could stimulate buyer demand, especially among first-time homebuyers.
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Tariff exemptions for construction materials: With tariffs driving up costs, exemptions could bring down the price of lumber, steel, and other critical building inputs—improving margins for developers.
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Pressure on the Federal Reserve: The administration has been pushing for lower interest rates, arguing that current levels (4.25–4.5%) are worsening affordability. If rates do come down later this year, investors will have access to cheaper debt, fueling both acquisitions and development.
A Mixed Policy Track Record
While the emergency declaration is new, Trump’s housing policies so far have been a mixed bag:
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Expansion of the Low-Income Housing Tax Credit (LIHTC) and increased budgets for Fannie Mae and Freddie Mac have provided some tailwinds.
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On the other hand, cuts to programs like the Community Development Financial Institutions Fund have removed financing tools that many developers rely on for affordable projects.
This inconsistency is why investors need to pay close attention, not just to the headlines, but to the specific policy levers being pulled.
The Fed, Rates, and Investor Strategy
The Federal Reserve remains the wild card. Chairman Jerome Powell has resisted political pressure to cut rates, though in his August 22 speech he hinted at a possible reduction during the next meeting (September 17).
For investors, this is critical. Elevated borrowing costs have stalled deals, sidelined buyers, and slowed new construction. If rates drop, even modestly, we could see a surge in transaction activity and renewed competition for assets.
What Investors Should Watch
As this housing emergency proposal develops, here are three key areas I recommend monitoring:
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Policy Details: Will zoning reform and tariff exemptions make it into the final plan? These changes could unlock supply and lower costs.
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Fed Decisions: Rate cuts would immediately impact cap rates, valuations, and financing options.
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Market Psychology: Beyond policy, investor confidence will swing based on whether Washington appears to be stabilizing housing or adding uncertainty.
Final Thoughts
I’ve been investing in real estate for over 30 years, and one thing is always true: policy shifts create both risks and opportunities. Whether or not a national housing emergency is declared, affordability isn’t going away as a political issue, and investors who adapt fastest will win.
Stay tuned, watch the Fed closely, and be ready to act when policy creates openings in your market.
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