How the 2024 election may impact housing affordability

July 29, 2024 5:00 AM

Enjoy complimentary access to top ideas and insights — selected by our editors.

An already contentious election season became more turbulent on July 21 when President Joe Biden dropped out of the presidential race, endorsing his Vice President Kamala Harris as the democratic candidate. The move came just days after the Republican National Convention, where candidate and former President Donald Trump announced Senator JD Vance as his running mate. For voters, the question remains: How do these new players' policies stack up?

Vice President Harris doesn't have strong progressive credentials on banking issues. She's taken criticism, for example, for declining to prosecute OneWest Bank or its then-CEO Steven Mnuchin, despite the California Department of Justice's recommendation to do so when the bank was found to have participated in "widespread misconduct" when foreclosing on homes.

Now, all eyes are on how Harris will navigate ongoing housing and mortgage concerns. Just days before he exited the race, President Biden proposed a nationwide cap on rent increases, with a suggested max of 5%, in hopes of curbing increasing housing costs. As Harris develops and proposes her own policies, it's unclear how much they will mirror or depart from Biden's.

Meanwhile, Ohio senator JD Vance continues to connect housing issues to immigration. In a Senate Banking Committee hearing on rural housing legislation last May, Vance said the housing crisis is partially caused by what he sees as the more lax immigration policies of the Biden administration and the overall Democratic Party. To support his argument, Vance cited what he described as increases in housing costs and rents following mass immigration into metro areas, towns and counties.

Starter homes have been the most impacted by the housing inventory shortage, and their prices have remained elevated. Vance said that as a result of Immigrants typically settling down in neighborhoods with the lowest housing values other Americans are unable to enter the market.

"In the neighborhood where you have the highest inflow of immigration, you also have declining home prices," Vance said during the hearing. "Rich people who have homes in low immigration areas benefit from mass immigration policies and everybody else finds the American dream of homeownership further and further away because we've effectively invited five to 10 million people into our country to break our laws."

Read more about the housing and mortgage issues that are involved with this election.

How the election will impact credit risk transfers

On July 18, Fannie Mae priced a $659 million credit-risk transfer through a real estate mortgage investment conduit structure, marking the fifth deal of this type it's brought to market this year.

Since the first CAS deal in 2013, the government-sponsored enterprise has issued $68 billion in notes, sharing some of the credit risk on almost $2.3 trillion in single-family loans with private investors; but the upcoming presidential election in November raises questions about the extent of future activity.

The GSE capital framework drawn up under Mark Calabria, who formerly headed the Federal Housing Finance Agency during the Trump administration, increased the risk weighting for credit risk transfers. Due to that development and a pandemic-related disruption of the market, Fannie temporarily withdrew from CRT activity.

It later returned as Sandra Thompson, who headed the Federal Housing Finance Agency under the Biden administration, began easing CRTs' capital treatment.

Read more:

What will happen to credit risk transfers after November?

President Biden Convenes Meeting Of Competition Council

Jim Lo Scalzo/Bloomberg

Biden proposes nationwide cap on rent increases

President Joe Biden proposed a nationwide cap on rent increases in an ongoing effort to lower housing costs on July 16 as part of the Biden-Harris Housing Plan. He called on Congress to pass legislation requiring corporate landlords to cap annual rent increases on existing units at 5% or lose valuable federal tax breaks.

The cap would be in place this year once passed and for the next two years. It would set restrictions on landlords holding more than 50 units, which covers more than 20 million units nationwide, but includes an exception for new construction and substantial renovation.

If passed, the ultimatum would make it harder for landlords who raise rent by more than 5% to write off expenses related to costs arising from extraneous things like wear and tear on their buildings, LendingTree senior economist Jacob Channel recently told National Mortgage News' Riley Edenbeck.

Read more:

Biden proposes 5% annual cap on rent increases

Bonnie Cash/Bloomberg

Biden exits race, endorses Kamala Harris

President Joe Biden dropped out of the presidential race on July 21, endorsing Vice President Kamala Harris to lead the Democratic ticket in November.

It's not clear how Harris, who's typically been seen as a political moderate, would approach economic issues should she be elected president. With courts of law becoming increasingly powerful in all kinds of policy realms and Congress tightly gridlocked on almost any issue, the next president of the country will have perhaps the most influence on economic and banking policy of any other leader.

Harris has advanced the Biden administration's economic priorities during her time as vice president, including championing the infrastructure bill that Biden signed. As a senator, she introduced a tax credit of up to $6,000 for middle- and low-income families.

Read more:

Biden leaves ballot, casting attention on Harris' record with bankers

Donald Trump And JD Vance Hold Campaign Rally In Michigan

Emily Elconin/Bloomberg

JD Vance connects immigration to housing affordability

Former president Donald Trump has selected senator JD Vance as his running mate. Vance has garnered national attention, partially for his controversial ideas for resolving the housing affordability crisis.

"Not having 20 million illegal aliens who need to be housed (often at public expense) will absolutely make housing more affordable for American citizens," Vance said in a June post on X. The senator was responding to a post claiming that Trump's policies won't make homes more affordable.

In the 2022 senate race, one of Vance's top donors was Rock Holdings, according to OpenSecrets. Rock Holdings owns Rocket Mortgage and Amrock among other companies. Another donor was the private equity firm Blackstone Group, which sports the Blackstone REIT and a $600 billion global real estate portfolio.

Read more:

JD Vance's stance on housing affordability tied to immigration

Donald Trump Speaks After Meeting With Republican Lawmakers

Al Drago/Bloomberg

How GSE reform could change in a second Trump win

With the possibility of a second Trump term, there has also been speculation that Mark Calabria could return to once again lead the government-sponsored enterprises' regulator and conservator, but now analysts are saying it could be someone else.

"I don't think Director Calabria would return, but I think somebody in his mold might," Isaac Boltansky, managing director at BTIG, said while speaking on a GSE reform panel at the Mortgage Bankers Association's Secondary and Capital Markets Conference in New York in May. "I think he wants another job."

A second Trump administration might not move that fast on GSE reform because the expiration of tax cuts will likely be more of a priority, analysts have said, echoing statements Calabria previously has made.

Read more:

Why GSE reform might look different in a second Trump term