For most of us, our home is our single biggest asset and an important source of retirement income. But government policy can have a big impact on whether our home value goes up or down. Here’s what you need to know about what Clinton and Trump say they will or will not do to help America’s housing and all of our home values.
For starters, Clinton has said that she would use $25 billion of her over $125 billion economic revitalization plan to break these barriers to homeownership for first timers and lower income buyers. Clinton has also discussed government assistance saving a down payment, similar to policies that help folks save for retirement, particularly in underserved communities where folks are earning less than the area median income. And steps to make rent more affordable since high rent is also preventing folks from saving a down payment. Another proposal may include, for example, matching up to $10,000. Clinton’s housing platform also contemplates addressing affordability in general by, for example, easing local barriers and providing more incentives for developers to build affordable work force housing. Clinton generally defends fair housing laws and the Consumer Finance Protection Bureau, established when the bubble burst to go after banks, Wall Street, pay day lenders and such who rip off consumer.
Trump has not said much about housing yet. At least no specific policy ideas. In general, he has said that he wants to cut government spending which would presumably include some of the program's we just talked about such as housing counseling or incentives for developers to build more work force housing. He has said that he would dismantle the Dodd Frank Act which created the Consumer Financial Protection Bureau so he'd presumably seek to eliminate that agency as well. He has also said that he would like to eliminate the Department of Housing and Urban Development (HUD) which oversees our nations fair housing laws as well as Fannie, Freddie and FHA, all of which he'd like to reform. Generally speaking he favors scaling back the role of government in housing and, specifically, rules designed to protect the environment that might interfere with housing.
So which of these platforms is likely to be better for our own home values? Well, we know that a healthy housing market starts with first time home buyers because those folks create an upward domino effect. And we know the greatest barrier for first timers is the high cost of housing, saving a down payment and getting financing. Home equity is still the largest source of retirement and other savings for average Americans, that can be an important safety net keeping folks off of government programs.
So programs that support that, theoretically support all our home values. Keeping rent affordable is important for the same reasons. When folks pay too much for rent, they can't afford to live or certainly can't save a down payment. Half all Americas renters today are paying more than the recommended third of their income towards rent. A quarter of them are paying more than half their income towards rent.
And improving funding for housing counseling is a proven method to reduce defaults. Particularly with all the discussion to reform Fannie, Freddie and FHA, where most first time buyers and a lot of us in general get our home loans, these are important policy issues because if folks can't get home loans they can't buy homes and that puts the value of all our homes at risk.
The flip side, of course, is that when financing is too easy to get you have problems, government programs cost money, and not everyone should or wants to own a home. So we need to strike a balance. At the end of the day, it boils down to what kind of role you believe our government should play in assuring that homeownership is accessible to average Americans.