The 2024 election cycle has revealed how important housing affordability is to American society. It is an important issue that cuts across geographic, racial, generational, and economic divides. When the Trump administration takes office on January 20, home ownership should be one of the priorities of the administration’s first 100 days.
Earlier this year, an IPX survey revealed that a whopping 70% of Americans believe that buying a home is a no-brainer. A 2023 Redfin report showed only 16% of homes were considered affordable for the average American family. A majority of both Democrats and Republicans have expressed support for federal action to make home ownership more accessible, turning home ownership and the broader housing crisis into one of the key bipartisan issues for returning and newly elected officials to address in 2025.
There are several ways Congress and the Trump administration can take to increase affordable homeownership. First, policymakers must address the shortage of single-family housing. The current nationwide shortage of 3.8 million affordable homes is causing prices to rise, creating affordability problems for buyers who are forced to come up with large down payments.
There are proposals that will directly address the issue of basic services. The Neighborhood Housing Investment Act, currently introduced in Congress with bipartisan support in both the House and Senate, will help combat this shortage by encouraging the development and renovation of single-family homes in distressed urban, suburban, and rural areas. By providing $20 billion in tax credits over the next decade, the legislation will spur the development of more than 500,000 new homes in blighted areas across the country.
Investing in repairs and renovations to our existing housing and increasing the supply of single-family homes will open up options for buyers and lower home prices.
In addition to the shortage of affordable housing, policy makers must also address the rise of private institutional investors and their impact on home ownership. In cities across the country, dozens of institutional investors are buying up affordable homes and renting them out at skyrocketing rents. When investors are buying affordable homes, families who dream of owning a home are struggling to afford it. This problem is expected to get worse. An estimated 40% of homes may be owned by investors by 2030, limiting the opportunity for homeownership for low- and middle-income Americans.
In many markets, institutional buyers target Black or minority neighborhoods, in part because these neighborhoods tend to have lower purchase prices and relatively higher rents. The resulting transfer of ownership from minority communities to corporate landlords destabilizes communities and widens the nation’s racial wealth gap. The gap between Black and White homeowners widens to 28% by 2022. The racial home ownership gap remains a persistent barrier to closing the wider racial wealth gap.
Bipartisan concern over the growing influence of institutional investors on home ownership underscores the need to support mission-driven, nonprofit organizations that have long been the primary channel for bringing affordable housing to the market. The nonprofit housing delivery system is a collection of nonprofit housing organizations that work to create opportunities for those locked out of the home buying market. For decades these organizations have provided counseling services, found distressed properties, built and rehabilitated homes, raised capital, developed flexible financial solutions, and advocated for policy innovation.
Increasing the power of these organizations can help bring in the platform and institutional investors. One way to do that is to increase funding for community development financial institutions (CDFIs). CDFIs lend money to individuals and businesses that are generally excluded from conventional funds. During the previous administration, the investment of $100 million in CDFI funds for affordable housing called for continued cooperation with Congress and the Treasury Department to invest in CDFIs. While this commitment is substantial, more is needed from the Trump administration to restore balance to the housing market and enable the nonprofit housing delivery system to build, rehabilitate, and scale the production of affordable, owner-occupied housing.
Passing the Neighborhood Housing Investment Act and increasing support for CDFIs are important first steps to closing this gap. Many of Neighborhood Homes’ target areas have large numbers of homes in need of repair, including New Orleans, Detroit, and Birmingham – cities with large Black populations. Closing the racial home ownership gap is one of the major steps needed to help Black communities build intergenerational wealth, and, ensure equal home ownership opportunities for all Americans.
In every corner of the country, Americans agree that we need solutions to increase opportunities for affordable home ownership. By 2025 elected officials must prioritize legislation that promotes and protects housing affordability, increases housing supply, invests in CDFIs, and closes the homeownership gap.
Christopher Tyson is President of NCST (National Community Stabilization Trust).
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected].
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