The housing crisis is an issue that needs to be faced and tackled by the next administration. Both presidential candidates have contrasting stances on the issue along with different backgrounds. Trump, a real estate mogul, should be better for housing, but his history in the industry is questionable. Eighteen months before the housing crash, Trump started a mortgage company that would go on to fail. The company offered residential mortgages with quick approval, and aggressive salesmen; the same kind of mortgages that led to the housing crisis in the first place. After it failed, Trump distanced himself from the company and claimed he wasn’t involved with it, blaming the people he hired to run the business. The failed business left behind unpaid employees as well as unpaid taxes. Today, he claims that he predicted the housing crisis, but the facts tell a different story.
On the other hand, Clinton has no background in real estate but experts believe that she would be better for the housing industry. Her biggest challenge is getting voters to trust her.
The question then becomes: with a unique track record for Trump, and a general sense of mistrust surrounding Clinton, who would be better for the housing industry and why?
Housing Crisis
Background: The current housing crisis, while not as bad as the one from last decade, is still a sensitive situation. One of the biggest issues is the lack of affordable housing. The current housing market isn’t in bad shape, but there is a problem with inventory.
What are the challenges facing the next administration when it comes to housing?
- 11 million households spend more than half of their income on rent
- There is a shortage of affordable rental homes
- The available houses are being rented by higher-income households making it so only 3 in 10 extremely low income renters have access to affordable housing
- Millennials aren’t buying homes
- More people are remodeling than buying
Which candidate do voters believe will be best for the housing crisis?
- 33% of current homeowners believe Trump would be better, while 31% believe Clinton would be better
- 35% of perspective homeowners believe Clinton would be better, while 27% believe Trump would be better
- According to a survey conducted by Berkshire Hathaway in June, 66% of existing homeowners see the current market as favorable, which is up 5% from the spring
Housing Plan Comparison
Background: the next president has to deal with the current housing issues. Clinton has laid out a specific plan, and Trump has made claims that he will as well, but it has yet to be seen.
Trump:
- In an address to the National Association of Home Builders (NAHB) Board of Directors, he said he plans to slash regulations to give the housing industry a boost by:
- Getting rid of any regulations that kill jobs
- Reducing income taxes on businesses up to 15%
- Removing bureaucrats who have implemented regulations that hurt job growth
- Appointing Supreme Court Justices who would have a positive impact on the industry
Clinton:
- Help responsible homeowners save for a down payment by providing funding initiatives in underserved communities to match up to $10,000 in savings for “responsible homeowners who earn less than the area median income to put towards a down payment on a first home”
- Increase funding and broaden credit terms for housing counseling programs shown to help borrowers become sustainable homeowners
- Update underwriting tools to reflect today’s job market by pushing congress to government agencies to use a new generation of credit testing tools
- Clarify the rules to expand access by giving every government agency that supports mortgage lending 90 days to present a plan to clarify their lending terms
- For renters, she plans to reduce the cost by defending the current supply of Low Income Housing Tax Credits and provide additional credits to communities where demand for the credits exceeds the supplies
Construction
Background: one of the issues facing the housing industry is a problem with inventory. Because construction relies heavily on foreign-born workers, the candidates’ policies on immigration are very important.
What does the construction industry currently look like?
- The business is four years into a shortage of framers, roofers, dry wallers, and painters
- This has rained the cost of construction as well as slowed it down
- This was caused because Mexicans aren’t crossing the border like they were years ago
- Mexicans are returning home in huge numbers; more Mexicans have returned home since 2009 than there were when migration peaked in 2006 (Pew Research)
- 14% of construction jobs go to undocumented workers
- As of August, there are 454,000 unemployed construction workers in the US
- This is the lowest number for the month of August in more than 16 years
Which candidate is better for construction?
- Clinton because Trump’s plan to deport millions of undocumented immigrants would have a significant, negative impact of the construction industry
- According to Mark Boud, thecChief economist at Hanley Wood, deporting the millions of undocumented immigrants who stayed would result in “fewer homes built in an industry already short in terms of housing supply”
- The NAHB has even been lobbying for a new guest worker program where foreign nationals would be allowed into the US for temporary stretches for jobs, including construction
- David Weekley, of David Weekley Homes, claims that reporting all of the laborers would put various different industries in bad shape
- The Fr*ee Architecture Firm has proposed that instead of building a wall, build a border city to accommodate the 100 million people living there
- Overall, most housing professionals agree that Trump’s stance on immigration is problematic for housing and will have negative long term effects
Solar Energy
Background: Solar energy and housing are intertwined, and are a hot-button issue with long-term repercussions. The GOP and the Democratic Parties have always have very different views on this issue, and it has become increasingly important in the past few years.
Where does the solar power industry fit into the election?
- Democrats back government incentives and funding, which is opposed by Republicans who believe in market-based mechanisms
- Currently at the federal level, there is a 30% solar investment tax credit which is the most important policy mechanism for supporting the solar energy sector
- There are also state-level regulations like net metering and renewable portfolio standards which require/encourage utility companies to derive a certain minimum of their electricity supply from renewable sources
- The federal government plays a role by incentivizing renewables by lowering emissions for conventional fossil fuel sources
What is the future of solar energy?
- Solar is becoming increasingly economically feasible, reaching grid parity in many southwestern US states
Where does each candidate stand in terms of solar energy?
- Clinton
- Plans to install 500 million solar panels during the first term
- Intends to defend, implement and extend pollution and efficiency standards, including the Obama Administration’s Clean Power Plan
- Part of her plan requires Congress’ approval, but would be very good for solar demand and boosting near-term pricing
- Trump
- Has not outlined specific agenda or target for renewables, and has expressed skepticism about man-made climate change
- Intends to rescind the Obama Administration’s Climate Action Plan and potentially cancel the Paris climate agreement that world powers signed in December 2015
- This would be beneficial for the oil and coal industries
Which candidate is better for solar energy?
- Clinton has better solar power policies that if implement could provide long-term effects and essentially lead the path for other countries to follow suit
- Trump would have no negative short-term implications but would have negative long-term implications because the US is a world leader – if the US is against solar energy, other countries are likely to follow suit
Overall, who would be better for the housing industry?
- Trump has not released a plan for dealing with housing
While Trump has a background in real estate, Clinton’s proposed housing policies would be more beneficial for dealing with the housing crisis
