Housing is the foundation of the economy. Homes represent the single largest asset for most Americans. They are a vital source of wealth creation that supports consumer spending, which in turn represents about two-thirds of U.S. economic output.
It’s not a surprise, then, that the Trump administration recently said it was considering declaring the housing crisis a national emergency. Well, no kidding. Years of insufficient new housing, rising construction costs and elevated mortgage rates have put homeownership out of reach for a growing share of the country. The latest Federal Reserve survey of consumer finances confirms that affordability has worsened. The median home is worth more than 4.6 times the median family income. In 1995 it was 3.8.
The federal government alone can’t solve the housing crisis. Some of the reasons for rising prices, such as lack of building permits, can be addressed only at the local level. That said, the Trump administration could take steps that would meaningfully help make American housing more affordable. It just needs to rethink some of its signature policies.
One of the biggest issues is supply — especially smaller starter homes for younger and lower-income households, which typically aren’t as profitable for developers. In 2023, just 9 percent of new homes were smaller than 1,400 square feet, a typical measure. In 1982, 40 percent hit that mark.
Congress is considering legislation that includes tax credits for builders and incentives for local governments to streamline permitting. That will help. But here’s the trickier problem. According to the National Association of Home Builders, immigrants represent one in four American construction workers. Want a ceiling for your new home? More than 60 percent of ceiling installers are immigrants.
These workers were already in high demand before President Trump’s crackdown on immigrants. Nearly two-thirds of U.S. home manufacturers said last year they faced shortages of carpenters and other key construction workers. Today, even fewer available workers means higher wages, which adds to the cost of new housing, and fewer homes getting built.
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The post Trump Could Help the Housing Crisis, if He Just Did Everything Differently appeared first on New York Times.
