What's at stake for the housing market post-election

John Allen

Housing has been quasi-governmental for decades. The U.S. government has viewed housing as a cornerstone of the economy that needs both growth and regulation; the dichotomy between those two in a privatized financing market makes housing a bit tricky. So President Franklin D. Roosevelt created Fannie Mae in 1938 to maintain both of those characteristics and ensure that American's can purchase homes without too many complications from private lenders.

The idea of Fannie Mae was simple: utilize a governmental organization to buy assets from primary lenders as a form of insurance for those lenders. Then securitize those assets and sell them to investors who bear the risk of delinquency. If lenders feel secure, then they will underwrite more loans. If more loans are made, then more Americans own homes. This was a big federal initiative during the 20th century, but people are now questioning whether the government should still be involved. And your vote could potentially determine that outcome.

  • Government Sponsorship: President Donald Trump, if elected for a second term, aims to diminish the relationship between the government and Fannie Mae and Freddie Mac, thereby privatizing the industry. Presidential elect Joe Biden, if elected as president, aims to keep the governmental relationship with Fannie and Freddie in tact as it currently stands.
  • Evictions: Trump has been pushing against evictions to help renters and homeowners during the pandemic with the stimulus bill in March and the moratorium on foreclosures in September. Biden also has been pushing against evictions but wants to restrict them an entire year.
  • Taxes: Trump lowered tax deductions in 2017 which were in favor of current homeowners. Biden proposes a $15,000 advanceable tax deduction for first-time homebuyers to reduce the burden of a downpayment.
  • Fair Housing: Trump plans to revise the Community Reinvestment Act to score banks based on their minority and low-income lending practices with higher weights for credit cards and personal loans. Biden plans to expand the act so that banks, non-bank lenders, insurance companies face more regulation towards their treatment of minority borrowers. Biden also wants to create a public credit report agency to supply consumers with government-issued credit scores.
  • Affordable Housing: Trump enacted the Opportunity Zone program in 2017 to provide investors with tax credits if they invest money into low-income communities via real estate development and rehabilitation. Biden plans to increase Section 8 funding, pump $100 billion into developing affordable housing, and provide renters with legal assistance when facing eviction.

Both candidates are focused on improving housing one way or another. Some people favor lesser regulation while others think that regulation is needed to make housing more ubiquitous across the nation. Regardless, this upcoming election will have a big impact on housing and whether or not the government will continue to play the pivotal role that it has for years.

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