Trepp has identified supply inelasticity as a key factor constraining multifamily markets. In other words, the market is unable to create enough supply to meet demand, for various reasons explained in our Chief Economist’s latest article: The Housing Equation Policy, Affordability, & Supply Constraints in the United States. While specific housing and other CRE-centric policies have been hard to come by from the Trump campaign, we have identified the following possible initiatives:
The Trump campaign has proposed streamlining the regulatory process and reducing bureaucratic hurdles to expedite construction timelines, which would allow for faster building and quicker price reductions.
The Trump campaign generally proposed measures to assist for first-time home buyers. Due to supply inelasticity, the likely outcome of an immediate demand-side subsidy would be higher prices, with sellers as the ultimate beneficiaries. Demand-side subsidies could be beneficial in the future when there is sufficient supply of affordable housing and obtaining financing prevents home ownership.
Most land-use and zoning regulations are established at the municipal level, meaning that the president does not have authority over this policy lever. However, the federal government can implement regulations on federal lands, and the Trump campaign has proposed releasing federal land tracts for housing development.
Opportunity Zone tax incentives were created in 2017 by a bipartisan coalition to lure investors toward under-invested neighborhoods. This program was championed by President Trump, and we expect that the President-elect would support similar programs if introduced.
Source: Commercial Real Estate Under Trump 2.0: Opportunities and Challenges Ahead
