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Saturday, November 5, 2016

How Will the Presidential Election Impact Housing?

Have you heard candidates acknowledge the affordable housing crisis on the campaign trail? An Ipsos poll conducted this summer found that 76% of likely voters would be more likely to support a candidate who made housing affordability a campaign focus. Yet, as we near election day, you probably won't hear much about housing policy. In fact, there has been limited discussion and information about housing throughout the entire campaign season (see the Huffington Post article on this topic). This despite the heavy coverage of housing issues in the news over the past year, most prominently the rapid increase in housing costs and the pervasiveness of homelessness. As has been often reported, housing affordability has fallen to crisis proportions in most major metros across the country.

In this blog, I try to uncover any evidence of housing policy plans in the Clinton and Trump platforms. Where policy does not exist, I will attempt to conjecture based on the candidates comments, background, and the impact of other related policy statements.

While there was essentially no discussion on this issue in the presidential debates, the Clinton campaign has articulated a couple public statements about their housing policy. These can be found in a September 21, 2016 New York Times editorial written by Hillary Clinton titled "My Plan for Helping America's Poor", and an August 12, 2016 CNN editorial written by Tim Kaine titled "How to Make Housing Fair in America".

In Clinton's editorial, she calls for a "national commitment to create more affordable housing", noting that 11.4 million households spend more than half of their income on rent. She outlines a plan to address this that includes expanding Low Income Housing Tax Credits in high cost areas to increase affordable housing supply. As a broader strategy for addressing poverty, Clinton wants to direct 10% of federal investments to communities where 20% of the population has been living below the federal poverty threshold for 30 years. While not specifically stated, this targeting formula might apply to HUD community development programs such as the Community Development Block Grant.

In Kaine's editorial, he shares his experience fighting racial discrimination in housing as an attorney in Richmond, Virginia. He states that home is foundational to the quality of our lives as a significant determinant in the access to jobs, schools, air quality and other factors. After pointing out that the federal government brought a housing discrimination suit against Trump's company for systematic racial discrimination practices in 39 of his rental properties, Kaine goes on to describe how he will enforce the Fair Housing Act to fight discrimination. In addition to expanding Low Income Housing Tax Credits, Kaine wants to increase rental assistance through Section 8 housing vouchers, provide more support for public housing and link that support to economic development initiatives, and provide downpayment assistance for first-time home buyers.

Hillary Clinton's voting record in the Senate demonstrates that she is a supporter of existing affordable housing programs. She was also a co-sponsor to the bill that established the National Housing Trust Fund, which allocates a small portion of revenue generated by Fannie Mae and Freddie Mac to subsidize housing targeted to extremely low income households.

The 2016 Democratic Party Platform includes a strategy to preserve and increase the supply of affordable rental housing by expanding incentives that ease local barriers to development, increasing funding to the National Housing Trust Fund, supporting the Neighborhood Stabilization Program that rehabilitates foreclosed homes, and increasing funding for maintenance of public housing and for rental assistance. The platform also commits to enhancing support for programs that address homelessness, especially for the chronically homeless, veterans and families. The Democratic Party plans to bolster programs that assist first-time home buyers, including protecting home buyers from predatory lending by defending the work of the Consumer Financial Protection Bureau. The platform also commits to strengthen and enforce the Fair Housing Act.

The Trump campaign has provided virtually no information on their plans with regard to housing. Therefore, we are left to conjecture how Trump might approach housing based on the information available. Donald Trump's father, Fred Trump, was a real estate developer that built housing and helped Donald get started in the business. Fred Trump built 27,000 low-income affordable units in the New York area. Donald Trump has not played up this accomplishment, nor has he spoke to the issue of affordable housing.

In 1973, the U.S. Department of Justice charged that the Trump family business violated the Fair Housing Act while Donald was President of his father's company. The charge found that the Trumps employed racially discriminatory practices in 39 of their apartment buildings in New York City, as reported by Politifact.

The 2016 Republican Party Platform includes a section titled "Responsible Homeownership and Rental Opportunities" that generally addresses housing issues without getting into policy specifics. It advocates for scaling back the federal role in the housing market, particularly Fannie Mae and Freddie Mac, and proposes a critical review of how federal regulations increase the cost and limit the supply of housing. It also also encourages reforms to mortgage practices that provide clear and prudent underwriting standards. It is unclear how these reforms would come about and who would implement them.  Finally, the platform stresses that zoning decisions must remain under local control, and that federal efforts to address economic and racial segregation and discrimination through Affirmatively Furthering Fair Housing regulations do not address discrimination as much as seek to usurp self government.

One could project that given his family's background in low-income housing development, Donald Trump may be favorably disposed to supporting the Low Income Housing Tax Credit program. However, Trump has also talked about simplifying the tax code and eliminating numerous tax credits on the campaign trail.

While it is difficult to forecast how Trump would treat existing housing programs if he were elected, his tax plan would probably severely reduce the availability of funds for programs that assist low-income households. Politifact reports that the conservative Tax Foundation estimated that Trump's proposed tax cuts for the wealthy would reduce federal revenue by $4.4 to $5.9 trillion. After incorporating projected economic growth resulting from the tax cuts, the Tax Foundation estimate of the reduction in federal revenue is reduced to $2.6 to $3.9 trillion. The Committee for a Responsible Federal Budget estimated that Trump's tax plan would increase the federal deficit by $5.3 trillion over the next decade. The same study estimated that Clinton's tax plan would increase the federal deficit by $200 billion over the same period. The Committee for a Responsible Federal Budget study does not project new revenue from economic growth that results from tax cuts.

For other sources on each presidential candidate's positions on housing policy:
  •  CNBC did an overview that focused on how each candidate would approach opening up the market through regulatory reform.

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