What Does a Second Trump Presidency Mean for the Affordable Housing Industry

As Donald Trump prepares to begin his second term, affordable housing remains a key issue in the U.S. During his first term, he cut the Obama administration's Affirmatively Furthering Fair Housing (AFFH) Act. This controversial legislation had many against it, with some arguing it imposed unnecessary regulations on an already struggling sector, while others saw it as crucial for increasing housing equality.

Trump's past has shown his willingness to reduce regulations to spur development. In addition to cutting the AFFH, he has worked with other Republicans to increase funding for the Low-Income Housing Tax Credit (LIHTC), which is crucial for incentivizing housing developers. Without it, affordable housing doesn't offer enough financial benefits for investors compared to other real estate asset classes.

Since his first term, home prices and interest rates have risen significantly, making it nearly impossible for first-time homebuyers to purchase a house. Coupled with the rising cost of living, the housing cost burden has only increased. Rent and mortgage payments now account for an increasing share of people's spending. This indicator, used by economists, measures housing affordability in a given area. Densely populated areas generally have a higher cost burden than rural ones, raising concerns about housing in large metropolitan areas.

What does Trump have planned for his second term? The specifics remain unclear. However, he is generally focused on removing regulations and zoning that make it difficult to build new properties. At the same time, he has expressed opposition to low-income housing. In repealing the AFFH, he suggested that low-income housing contributes to high crime and affects housing prices. Whether true or not, this negative view raises concerns about his approach to housing reform. Only time will tell if Trump can effectively address the issue.