Happy Tuesday and welcome to another edition rent free. News over the past week has centered around the question of whether President Joe Biden will remain as the Democratic presidential nominee or drop out of the race in favor of a younger, healthier alternative.
I tend to agree with my colleague Robbie Soave that Biden isn’t going anywhere.
Whether he stays in office or not, I think now is a good time to take a longer look at the president’s record on housing policy during his first term, how that compares to former President Donald Trump’s own tenure, and what we You can expect both men to be re-elected.
Clearly, housing is not a major issue in the 2024 campaign. Still, elections have consequences, even on housing policy. This week’s newsletter attempts to detail what those consequences will be.
Joe Biden’s housing record
The federal government has little direct say over the land-use regulations that most affect housing production. Zoning, permitting, environmental reviews, impact fees, building codes, etc. are mostly set at the state or local level.
Still, the Biden administration has shown some interest in pushing local and state governments in a more supply-friendly direction.
Want to learn more about city issues like regulation, development and zoning? register rent free from reason and Christian Brikighi.
Biden has said the country needs millions of new homes to lower housing costs. His government has issued a number of “Housing Supply Action Plans” aimed at boosting housing production.
It’s a good thing that the White House at least recognizes that the country needs to build more housing. On a practical level, however, the White House’s efforts to encourage zoning reform have failed spectacularly.
Zoning reform fails
In 2020, Biden campaigned on a (relatively) aggressive policy of limiting major federal housing and transportation subsidies to loosened land-use regulations.
After taking office, the government significantly scaled back these programs.
A “Housing Supply Action Plan” released by the White House in May 2022 calls for restructuring some of the smaller, discretionary transportation grant programs to take into account local policy changes that support supply when selecting recipients.
No one really expects these changes to have much of an impact on housing supply. The final list of grantees contains little evidence that the White House spent significant time looking at jurisdictions’ housing production statistics when awarding funds.
For example, just days after California announced it would conduct an audit, San Francisco received a $20 million grant from the Rebuilding America’s Infrastructure Sustainably and Equitable (RAISE) program, which it said was a restructuring priority. to focus on zoning reform.
In a budget request to Congress, Biden’s Department of Housing and Urban Development (HUD) proposed a $10 billion grant program to incentivize the reduction of “barriers to affordable housing.”
Plans on that scale didn’t happen. But Congress did ultimately appropriate $85 million for the Pathways to Housing (PRO) grant program.
The statutory language creating the PRO grant program gives HUD wide discretion in deciding which jurisdictions will receive this relatively small amount of funding.
However, few of these grants go to jurisdictions that have made productive changes to their housing laws. As last week rent free Some of these cities received funding for adopting “inclusionary zoning” policies, which tax the production of new housing.
Biden’s fair housing re-regulation
While the federal government has little responsibility for zoning policy, it does play a larger role in regulating housing discrimination.
The federal Fair Housing Act prohibits “discrimination based on race, color, religion, sex, disability, national origin, or familial status (“protected class”) in the sale, rental, or financing of residential and other housing-related activities.”
The actual text of the Fair Housing Act is fairly brief, giving the president fairly broad authority to define what housing discrimination is and to enact regulations to enforce those definitions.
Biden has been an aggressive re-regulator in this regard.
He reinstated the Obama-era “disparate impact” statute (which Trump repealed) that banned housing practices that had a discriminatory impact on protected classes, even if there was no discriminatory intent.
The Biden administration has issued regulatory guidance declaring landlords’ blanket refusal to rent to people with criminal records a violation of the Fair Housing Act. It also provides grants to fair housing organizations that make a business of suing housing providers because of their policies that allegedly have disparate impacts, such as not renting to people who have been evicted in the past.
Reasonable people may disagree about the appropriate scope of federal fair housing laws. However, the less ability landlords have to decide for themselves whether they want to rent to someone with a criminal and/or eviction history, the riskier the rental business becomes for them. On the margin, this will mean that fewer people will end up renting out properties.
Biden’s other policies to make housing more expensive
There are many federal policies that do not directly regulate housing but still have a significant impact on housing costs and the amount of construction.
Biden often spends extravagantly with the tacit approval of both parties in Congress. His administration has increased 10-year borrowing costs by $4.3 trillion, according to the Committee for a Responsible Federal Budget.
All this extra spending and debt pushed up inflation during his first term, prompting the Fed to raise interest rates. The result is that the cost of borrowing money to buy a new home is much higher.
When fewer potential homebuyers can afford financing, fewer homes are built.
The Biden administration has also increased tariffs on Canadian lumber and Chinese steel. Higher tariffs on materials required for housing construction naturally means higher housing construction costs. The knock-on effect is higher house prices and lower housing productivity.
During his State of the Union address, Biden also accused landlords of “price manipulation” to drive up rents. His administration says the use of third-party rental recommendation software violates federal antitrust laws.
In fact, rental recommendation software often encourages landlords to cut rents more quickly when demand drops. To the extent that software tells landlords to raise rents, it’s because demand is growing and zoning laws prevent supply from keeping up.
Trump’s choice
Yesterday, the Republican Party released its 2024 platform to “Make America Great Again.” It includes a platform on housing affordability that appears to contain some productive ideas.
“To help new homebuyers, Republicans will lower mortgage rates by cutting inflation, open up limited portions of federal lands to allow new home construction, promote homeownership through tax incentives and support for first-time homebuyers, and cut Regulations that unnecessarily raise housing costs,” the platform reads.
Minus the language about tax benefits (and the random capitalization), it all sounds pretty good.
Much of the land in the western states is owned by the federal government, so new development is prohibited. In places like Las Vegas and Salt Lake City, federal lands serve as de facto urban growth boundaries.
Opening up federal lands for housing construction is an underdiscussed, undervalued idea to increase housing production. Utah Republican Sen. Mike Lee has introduced a bill to do just that. (Trump also floated a more fanciful proposal to create new “free cities” on federal lands.)
Trump’s record on housing policy during his first term didn’t inspire much optimism.
Trump’s horrific zoning rhetoric
Zoning reform is a bipartisan issue. It’s also a polarizing issue for Donald Trump.
In his first term, our first developer president went from proposing solid Yinbi-inspired policies to running for re-election to becoming the nation’s NIMBY leader.
Trump’s Housing and Urban Development Secretary Ben Carson promised at the beginning of his administration that localities could get more federal funding by reducing regulations on apartment construction.
But in 2020, Trump’s attitude changed dramatically. In op-eds, tweets and speeches during the campaign season, the former president began warning that Democrats wanted to end the “suburban lifestyle dream” by ending single-family-only zoning and forcing multifamily development into low-density neighborhoods. ”.
In terms of policy, the impact of this shift in rhetoric will be minimal. Trump abandoned plans to use federal housing rules to encourage land use regulation, choosing instead to give HUD grants with no strings attached.
This is more of a missed opportunity than a huge blow to housing production. Rhetorically speaking, it is unhelpful to have a president go out of his way to preach about zoning regulations specifically because they prevent the construction of new apartments.
Spending, tariffs and deregulation
Under Trump, the White House has repeatedly asked Congress to cut spending on federal housing programs. The actual budget approved by Congress instead increased these programs. It’s the same story across the federal government.
While Biden has a terrible record on debt and deficits, Trump’s record is even worse. Trump signed $8.4 trillion in new debt into law during his four-year term. Nearly $5 trillion of that amount has nothing to do with emergency COVID-19 aid.
While inflation has soared under Biden, Trump’s deficit spending has done little to help. He is also responsible for the higher inflation, higher interest rates and higher mortgage costs we are experiencing now.
There are few differences between Trump and Biden on tariffs. The Trump administration has also increased tariffs on lumber, steel and other building materials, causing housing costs to rise.
Trump’s deregulation measures could have a more positive impact on housing supply and home prices. His efforts to limit the scope of federal clean water rules would make some greenfield development more feasible. He cut back on Obama-era “disparate impact” regulations and eased legal liability on housing providers.
Mass deportations as housing policy
While the 2024 Republican platform has some good housing policy ideas, it also has an incredibly worrying idea. The platform suggests that housing could be made more affordable in some places by deporting “illegal immigrants” and tightening immigration restrictions. Trump himself has promised to deport millions of people.
Whatever other criticisms may be leveled at Trump’s mass eviction plans, they will indeed reduce demand for housing. But they may also reduce housing supply. Although immigrants lived in houses, they also built many houses.
If we want to see more homes built, it would be counterproductive to evict those who actually do the work.
Four more years?
The benefit of both Trump and Biden having been presidents for one term is that we have a pretty good idea of how both candidates will perform during their time in office.
Rhetorically at least, they are very different. The Biden administration has talked well about zoning reform and the need for new housing supply. Trump has a history of defending the strictest zoning regulations, particularly because they prevent the construction of new apartments.
On more specific policies, there aren’t many differences between the two candidates. The Biden administration wants to enact broader federal fair housing regulations. The Trump administration wants looser policies.
Both men support tariffs that would raise construction costs. Both support runaway spending that drives up interest rates and mortgage costs.
Biden likes to scapegoat “price-fixing” landlords who raise rents. Trump likes to scapegoat immigrants who do the same thing.
With major party candidates like this, you can understand why some people’s election yard signs conflict with local sign code regulations.
