HOWARD HUSOCK: It’s time for a massive effort to solve America’s housing crisis

Owning a home has been a part of life for a long time. american dreamBut this dream was postponed.

Households in their 30s have only 42% ownership; This is 20 points below the national average.

The average age of all homebuyers is a record-breaking 59, and the age of first-time homebuyers has increased from 29 to 40 in 1981.

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As a solution, the Trump administration is implementing a 50-year mortgage.

Even though I don’t agree with this specific idea, I’m glad they brainstormed ways to tackle the problem.

We need a Marshall Plan for housing, a set of far-reaching initiatives that will make homes more affordable and get the dream back on track.

The federal government can use its bully pulpit to push for changes to bureaucracy and regulations that hinder construction and to promote policies that will increase housing and lower costs.

For starters, the White House and Fannie Mae should encourage shorter, 20-year mortgages instead.

A 20-year loan is payable, as Ed Pinto of the American Enterprise Institute argues, “When a 30-year loan leaves most homeowners saddled with mortgage payments for a decade or more, the cash flow freed up from a paid off short-term loan can be used to fund a child’s postsecondary needs and then accelerate one’s own retirement.”

The 20-year loan may be incentivized by a first-time buyer tax deduction.

This will be especially important today when the vast majority of taxpayers no longer itemize their tax returns, meaning they are not eligible for the mortgage interest deduction.

This cut has always favored wealthy buyers of high-end homes; so a targeted tax credit would help those who really need it more.

It is also time for the Trump White House to roll back one of the key initiatives of Elizabeth Warren’s pet project, the Consumer Protection Finance Agency.

The CPFC has pressured banks to limit their mortgages to “plain” mortgages based on their own rules or what consumers can afford.

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Adjustable-rate loans and other “mortgage products” may be right for some buyers who need to make a choice about how much risk they’re willing to take in exchange for entry into the home market.

But for those without the benefit of generous relatives, finding even a low down payment can be difficult.

Those without wealthy parents can apply for a “home savings account,” similar to the popular tax-sheltered health savings accounts launched by George W. Bush that hold about $59 billion.

But new home accounts should be designed only for down payments, not for long-term maintenance and other homeowners’ needs.

Buyers are also allowed today to withdraw $10,000 from a 401(k) penalty-free to go toward a down payment on a home.

Maybe it’s time to raise that ceiling.

It goes without saying that even the most creative financing and incentives will be insufficient to meet our housing needs without the most important problem: supply.

There are many reasons why there aren’t enough starter homes available.

In many cities, legislation makes construction difficult.

More retired Boomers own second homes.

Banks are increasingly buying real estate as investments and increasing prices.

Low turnover is another reason why Gen X buyers have such a hard time entering the market.

During COVID, mortgage rates reached record lows and many refinanced.

These property owners have a strong incentive not to trade up for a 3% mortgage and a much higher rate for a new home.

Another important reason: More and more people live in small houses, even alone.

The Census Bureau reports that the number of households increased by more than 2 million per year between 2019 and 2021.

This means we need not just more housing, but more types of housing; specifically into multiple smaller units, rather than the two-acre single-home lots common in many suburbs.

This is where Washington’s hard power reaches its limits.

Much of U.S. housing policy is determined at the hyper-local level by planning boards and zoning boards.

That’s why outgoing Mayor Eric Adams deserves so much credit for the redevelopment of New York’s “Yes City”; this would allow for secure basements and “accessory dwelling units” in parts of the city.

Accessory units or ‘granny flats’ can also be a means for older couples to downsize and sell their homes to younger households.

But as part of a federal initiative, the Marshall Housing Plan could spur the same changes across the country: Changing zoning to allow more housing; or providing tax incentives to buy undeveloped government land and build on it.

18,000 municipalities across the country stand in the way of what might often be called naturally occurring affordable housing — tiny homes on small lots, like those in the original Levittown, with just 750 square feet of living space.

Housing and Urban Development Secretary Scott Turner should encourage locals to allow private, unsubsidised, tiny homes and apartments, or what AEI’s Pinto calls “light touch density.”

Starting with the public housing that socialist Zohran Mamdani wants to revitalize, it is much more likely to win local approval than the subsidized, low-income housing that Democrats have long favored.

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Custom constructions are also less costly; In California, new housing units subsidized through low-income housing tax credits can cost more than $800,000 per unit; It’s a win for developers, but there aren’t many tenants.

However, construction costs for any housing will inevitably rise as a result of another of Trump’s policies: a 10% tariff on Canada’s abundant lumber and lumber products and a 25% tariff on kitchen cabinets and furniture.

De facto taxes are causing what the National Association of Home Builders calls “headwinds” that hinder new construction.

As a builder himself, he needs to rethink these tariffs.

Owning a home is a virtuous conspiracy that makes the country better.

Homeowners are more likely to manage neighborhoods better than renters; They are more likely to improve schools and services by participating in local government, the essence of American federalism.

The decline in homeownership is a problem that must be addressed federally and locally.

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But the Trump administration could take the lead with tax cuts and construction incentives.

The president can revive that dream.

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