How Trump And The GOP Can Solve A Housing Affordability Crisis

In one of his first major economic moves of 2026, President Donald Trump promised “to ban large institutional investors from buying more single-family homes” on Wednesday, adding that he would press Congress to make the measure permanent. Trump’s emphasis on making home ownership accessible is notable given that the unaffordability of housing is one of the most daunting challenges facing his administration and the nation at large. The issue looms large for the 2026 midterms, but if Republicans fail to effectively address housing affordability (or are perceived to fail), the detrimental ramifications for the GOP and conservatism more broadly threaten to extend far beyond the next election.

‘Affordability Crisis’

The unaffordability of housing has been described in a number of different ways: The average first-time homebuyer is 40; home prices have risen by 60 percent since 2019; 30-year mortgage rates have more than doubled since a low of 2.65 in January 2021; 2022 saw more than 22 million face rent categorized as unaffordable (that is, requiring more than 30 percent of household income), a new high. But perhaps the best tool for quantifying the problem is the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor (HOAM). The HOAM measures the relationship between median income for U.S. households and “qualified income,” which the Atlanta Fed defines as “income needed for annual homeownership cost to equal no more than 30 percent of annual income.”

The HOAM index is now at 1.44 as of October, meaning that the qualified income, or the income at which homeownership is considered affordable, is 44 percent higher than the median income across the U.S. As of October 2025, the Atlanta Fed pegged qualified income at $122,363, up from $69,770 in May 2021, the last time median household income and qualified income intersected.

As Heritage Foundation chief economist E.J. Antoni told The Federalist, the index is “near a record low. In other words, if you have the median household income, homes have rarely ever been this unaffordable.” Antoni also pointed out “one important caveat” about the index: It references pre-tax income. The 30 percent benchmark doesn’t account for state, local, and federal taxes, “so after tax, you’re looking at a significantly higher percentage.”

Numerous commentators have challenged the National Association of Realtors’ estimates that the average first-time homebuyer is 40, rising from 29 in 1981. These challenges cite data from the New York Federal Reserve Bank, which “shows markedly different results — a 1.7 and 0.2 year reduction in average age for 2001 and 2021 respectively,” according to Edward Pinto and Joseph Tracy at the American Enterprise Institute. The New York Fed’s larger dataset, unfortunately, reaches back only as far as 2000, leaving pre-2000 trends more difficult to discern. Even so, Pinto and Tracy note that first-time homebuyers (FTB) “face the dual challenge of historically high home prices and mortgage rates higher than what we have experienced in the last 15 years. From 2019 to 2024, the median FTB income needed to purchase a home increased by 41 percent nationally.”

Put another way, as Antoni observed in a Dec. 1 article titled “50-Year Mortgages Won’t Fix the Affordability Crisis,” U.S. consumers “saw the monthly mortgage payment on a median price home more than double in less than four years. If that’s not an affordability crisis, nothing is.”

‘Bad Government Policy’

In May 2021, several months into Joe Biden’s presidency, the median U.S. home price clocked in at $299,000, and the Atlanta Fed calculated the qualified income at slightly less than $70,000. Four and a half years later, in October 2025, the median home price exceeded $400,000. Multiple factors have driven the drastic increase, but Antoni said that “the quick and dirty version is bad government policy.” The Federal Reserve scurried to buy up federal debt “in order to accommodate trillions and trillions of dollars in government spending and borrowing in 2020.” (As much of the country’s workforce sat idle and the economy stagnated, government spending hurtled forward, increasing by approximately 50 percent.)

“The Federal Reserve was buying that debt with money created out of nothing,” Antoni said, calling the “money creation” a type of legal “counterfeiting.” Money acts as a measure of value, Antoni observed, like a yardstick: If it typically takes 100 yardsticks to cover the length of a football field (minus endzones), and inflation whittles down the yardstick, increasing the number of yardsticks needed to cover the field. The inflationary actions of the Fed and Congress effectively took a hatchet to the yardstick, while also artificially “keeping interest rates near zero.” Prices rose across the board, but markets that involve large loans — like the housing market — were especially sensitive to the low interest rates, as buyers engaged in low-interest-loan-fueled bidding wars, Antoni explained. Skyrocketing mortgage rates that came as the Fed sought to ease inflation put price-inflated homes out of reach for many would-be American homeowners.

In addition to sparking gobs of government spending and near-zero interest rates, the Covid pandemic drove up housing costs in other ways. Emily Hamilton, economist and senior research fellow at the Mercatus Center, told The Federalist that low interest rates and pandemic stimulus checks created a “perfect storm for house price appreciation.” At the same time, the rise of remote work during the pandemic and its aftermath also drove up costs. She noted that workers’ newfound mobility led to increased demand for housing and higher home prices “in places like the Midwest, places where demand was just quite low relative to their housing stocks before the pandemic, and places like the Mountain West, with … resort amenities that are really attractive to people.” In February 2022, the Pew Research Center found that about 60 percent of those with jobs that could be done remotely were working away from the office. Seventeen percent of respondents whose workplaces permitted in-person work chose to work remotely instead because of “the fact that they’ve relocated away from the area where they work.”

Even as poor monetary and fiscal policy drove the housing affordability crisis, negative long-term factors persisted, and continue to persist, making a burst-bubble decline unlikely. Hamilton told The Federalist that “if we look at housing construction relative to population over a long time period, we have been very low for a long time. Even … pre-financial crisis, when people thought there was way too much construction, it was still lower than historic periods post-World War II, when we saw a lot more construction relative to population and not just immediately post-World War II, but … say the ’50s through the ’80s.”

Economist Anne Bradley, who is the George and Sally Mayer Fellow for Economic Education and vice president of academic affairs at The Fund for American Studies, told The Federalist that the unaffordability of housing arises in large part because of “pernicious” local zoning restrictions and regulations that suffocate the supply. “Exclusionary zoning” abounds, Bradley said, preventing the building of townhomes and apartments, mandating minimum lot sizes, and even dictating “how many people are allowed to live in a house.” Jim Tobin, president and CEO of the National Association of Home Builders (NAHB), recently put the cost of federal, state, and local regulations at 24 percent “of the cost of a single-family home,” or nearly $100,000 per home. In 2022 NAHB research estimated that regulations accounted for more than 40 percent of “total development costs” of multifamily homes. “Zoning and regulations are really what’s holding up the housing market affordability,” Bradley said.

The burdensome regulatory and zoning practices create a Prohibition-like system, where builders must smuggle new homes through a gauntlet of government-created obstacles, Veronique de Rugy told The Federalist. De Rugy serves as the George Gibbs Chair in Political Economy and senior research fellow at the Mercatus Center. Starter homes are one of the casualties of that regulatory gauntlet, she said, as local government rules incentivize builders to construct larger homes, allowing them to bank larger profits for each trip through the gauntlet. “We’ve done all sorts of things to subsidize demand … while constraining supply. … I think laws … create an incentive to build bigger stuff.” De Rugy also cautioned that the increase in home sizes can distort historical affordability comparisons. “If you want to compare [affordability] to where we were before, you have to … do apples to apples and homes.”

Another factor in the high cost of housing, which J.D. Vance and the Trump administration have emphasized, is the influx of illegal immigrants under the watch of Joe Biden and Kamala Harris. In March at the National League of Cities Conference, Vance told audience members, “If you allow 20 million people to compete with American citizens for the cost of homes, you are going to have a large and, frankly, completely preventable spike in the demand for housing. And that is what we, of course, have seen.” While estimates vary, it is undisputed that Biden facilitated record-high immigration, whether legal or illegal — with the criminal nature of the latter making it impossible to quantify with specificity. In the process his administration used (or, arguably, misused) Temporary Protected Status and “parole” designations to open America’s borders even wider.

In December, the Department of Housing and Urban Development, led by Scott Turner, released the agency’s Worst Case Housing Needs Report, which found that “immigration accounts for up to 100 percent of housing demand growth in some regions, and for two-thirds of rental demand growth nationwide.” Even as the economy failed to grow enough “to lift the wages of low-income renting families high enough to make rent affordable,” all-time high immigration pushed affordable housing further out of reach, the report said.

“A lot of times … we just talk about supply or demand, and we forget it’s both,” Antoni explained. “This isn’t just simply the fact that we don’t have enough homes on the supply side; you can also make a very strong argument that there’s too much demand for homes. … On the demand side, the last several years, the Biden administration imported well over 10 million illegal aliens into this country, and that’s on top of all the people, obviously, who came here legally. That’s a huge increase in demand.”

With Biden ushering in a group of illegal aliens larger than the population of New Jersey, Antoni said, the effect on demand for housing is considerable — despite their being scattered throughout U.S. cities, towns, and suburbs. Antoni doesn’t see evidence for assuming illegal immigrants are only dwelling in apartment or Section 8 housing, but even if they were, the substitution effect drives demand in all types of housing.

Making America’s Homes Affordable Again

Even as renters and would-be homebuyers face persistently high prices for the reasons outlined above, there is some speculation that the current housing market is a bubble that will explode, leading to a significant decrease in prices. Near the end of last month, Newsweek Senior Housing Reporter Giulia Carbonaro wrote that “the U.S. housing market is going to face a price correction ‘worse than 2008,’ according to housing analyst Melody Wright, who expects home prices to drop in half starting as soon as next year.”

When asked whether he sees the current market mirroring the bubble in the lead-up to the 2008 financial crisis, Antoni told The Federalist that he does not. The Federal Reserve’s recent return to quantitative easing, Antoni said, makes it “very, very clear” that it is “not going to allow anything close to that to happen ever again.” Instead, the Fed will engage in “money creation” to prevent prices from falling. In addition, Antoni said, the housing supply in numerous locales remains “artificially low” due to extensive overregulation. How to tackle that overregulation is one of the most pressing issues of the housing affordability crisis. (Private sector innovation and increased productivity — which are beyond the scope of this article — also play a critical role in bringing down the high cost of housing.)

The existing regulation leaves much room for improvement. In a September article, Hamilton, along with Mercatus Center colleagues Salim Furth and Charles Gardner, detailed more than 15 reform options states should enact to counter anti-affordability government policies, including “limit[ing] fees exacted by local governments” and “eliminat[ing] aesthetic mandates and materials bans.” Hamilton told The Federalist that two top priorities for states and cities would be to “allow single-family housing on smaller lots and allow multifamily housing in greater quantities.” Smaller lots open the door for the construction of “smaller, more basic houses, because there’s not a good market for a small basic house on a big, expensive piece of land.”

While the bulk of the battle against cost-multiplying rules and regulations will be fought in state and municipal government, there’s a yet smaller level of “government” that shouldn’t be ignored. Reform is needed even at the granular level of the home association, Bradley said. When asked about citizens becoming educated and involved in rolling back restrictions, Bradley answered, “Whether it’s in your HOA or with the state government or with the city council, I think these are the pressure points, and we need to be vocal.” She sees the possibility of voters from the left and the right coming together on the issue, “because no one disagrees that housing should be affordable or their groceries, whatever it is.”

For these citizen advocates to be effective, however, they must be equipped with a basic understanding of the issue: Reduced regulation leads to more housing, which means cheaper housing. But a recent paper in the Journal of Economic Perspectives found that “ordinary people simply do not believe that adding more housing to the regional stock would reduce housing prices.” In fact, “large, bipartisan supermajorities support price controls” — despite their consistent failure.

Still, Bradley says there is citizen pushback against a persistent NIMBYism (Not In My Back Yard). “Now, as a response, you’re having the YIMBY movement — Yes In My Back Yard.” In addressing the NIMBY issue, Hamilton emphasized the importance of “changing hearts and minds.” It might even be necessary to appeal to family bonds. “Your grandkids aren’t going to be able to live near by you if you’re going to NIMBY in your neighborhood, or you might not even get grandkids because your kids can’t afford to start their own households if you and your friends are standing in the way of housing getting built.”

While the lion’s share of the deregulation, zoning reform, and pro-housing grassroots advocacy will happen at the state and local level, there are a variety of policies the federal government could pursue to ease the housing affordability crisis.

Regulations, of course, abound at the federal level, just as they do at the state and local level. One positive change, Antoni said, “would be reversing Biden-era regulations that artificially inflated home prices even more,” such as those enforcing stringent energy efficiency standards. These requirements only apply to certain federally subsidized mortgages, Antoni explained, but the rules corner builders into following them, because they have no way of knowing which type of loan the buyer will utilize. In November, Sen. John Barrasso, R-Wyo., introduced a bill rolling back Biden energy efficiency mandates costing homebuyers an estimated $31,000.

Trump’s enforcement of border security and immigration law, if continued, should drive down demand for housing, and with it prices. According to the administration, more than 2.5 million illegal immigrants have departed the country since Trump took office, either voluntarily or via forcible deportation. Antoni noted there has only been “slight downward pressure … because we just haven’t deported that many people relative to the number that came in.” A “complete reversal” of illegal immigration’s effects on demand would require a “complete reversal” of that immigration, which is not going to happen quicky.

Manufactured housing presents another opportunity for reform. “The federal government has full control over the building code for manufactured housing, which is the least expensive way to deliver a new unit of housing anywhere in the country,” Hamilton said. One guideline requires manufactured homes to be placed on a “permanent steel chassis, even if they’re going to be attached to a permanent foundation.” Nixing that requirement would allow for multiple stories and expanded design options, as well as reducing the cost to homebuyers.

Unsurprisingly, the Environmental Protection Agency also plays a role in increasing housing costs. Hamilton suggested revising EPA stormwater regulations for construction sites to ease the burden on homebuilders, while pointing to tax code reform as a “huge area of potential policymaking to encourage more construction.” Another way to lower housing costs, Bradley said, would be for the administration to roll back its tariffs, Bradley said, since they “increase the cost of imports, which include things like steel and various things that we would use to construct homes.”

Actions are important, obviously, but Bradley also emphasized the importance of how Trump speaks about housing affordability: “When the president — any president — speaks about something, people listen.” Bradley added that she was surprised at how Democrats had seized the affordability as the left’s issue during the lead-up to the midterms, when “it should be: We all care about this.” Though it’s easy to play the “blame game” with regard to the Biden administration, she observed, “Nobody cares. They care about whether they can buy groceries and pay their rent.” Trump needs to “be honest and open about what we’re going to do to fix those problems.” Where states and cities are driving up housing costs, Trump may do well to point to the migration from blue states to red states, pointing out how Republican policies do indeed make housing more affordable, even if the policies directly in play aren’t Trump’s.

While migration to a town or city where government regulations are not so onerous is an option for many, “mobility is harder” for those with lower incomes, leaving them to “disproportionately bear the burden,” Bradley noted. It’s also worth noting that migration born of financial necessity is a heavy burden for those whose ties to family, friends, churches, and communities ground them in areas where housing is prohibitively expensive. Conversely, high home or rental prices in regulation-oppressive areas may prevent those who wish to move there from doing so. As unaffordable housing rebuffs those who desire to move to make a higher income, Hamilton said, productivity decreases. “This is our whole country’s history … people moving to their own best opportunities, whatever those may look like. And we have these zoning rules that have just really reduced the extent to which that’s possible.”

Trump’s plan to appoint a new Federal Reserve chair near the beginning of 2026 raises the question of whether the Fed reducing rates would make housing more affordable. Not so, Antoni told The Federalist. “When interest rates go down, home prices tend to go up and vice versa. … Reductions in the interest rate on mortgages are likely going to result in people simply borrowing more and bidding up the price of homes.” De Rugy hopes to see a selection of an “independent” Fed chair who “will understand the interaction between monetary and fiscal policy.” A Fed chair who can have a positive effect on housing affordability should grasps the “actual mechanics of monetary policy,” Antoni observed. “He would utilize all the tools in the Fed’s toolkit.”

There are numerous other potential partial solutions, such as the sale of federal lands and the elimination of capital gains tax on the sale of homes — and anything that would reduce or slow the growth of the $38.5 trillion weighing down on the backs of American consumers.

As would be expected, there are also some courses of government action that would be inadvisable. The 50-year mortgage that Trump floated, De Rugy said, will not improve the situation. “My first instinct when I heard [of] the 50-year mortgage, why would you want people to spend more on interest?” She also argues against subsidizing demand for housing, for example, with the mortgage interest deduction. Bradley made a similar point: The government must avoid “artificially obfuscat[ing] the real price for people. … And that’s what happened in 2008 when the bottom fell out … people bought homes they could not really afford.” As Antoni summarized, American consumers need something else: “Potential homebuyers would benefit greatly from a whole-of-government approach at the federal, at the state, and at the local level, instituting reforms, particularly regulatory reforms.”

Mamdani-ism, Trump’s Legacy, and the Future of Conservatism

As important as affordable housing is to the American people, it’s also a critical political issue. Zohran Mamdani’s primary victory in June and his ultimate mayoral victory over Andrew Cuomo and Curtis Sliwa sent shockwaves throughout the political world. Even as critics pointed out the tried-and-failed history of Mamdani’s socialist policies, they gained ground among New Yorkers and Americans more broadly, likely because of their perceived potential to make housing (and other key household budget items) more affordable. In the aftermath, Trump hosted Mamdani at the White House, where he nonchalantly told the young communist to own his attacks on the president and emphasized the commonalities between his policies and Mamdani’s.

The cavalier friendliness of the meeting belied the threat that Zohran Mamdani-style socialism poses to Trump, his legacy, the MAGA movement, and the West. Despite Trump’s populist appeal, he’s as readily recognizable a capitalist as any, perhaps its most prominent emblem. If voters — especially younger voters — perceive the economy during his second presidency to be a failure, they may feel justified in rejecting capitalism altogether, and conservatism with it.

With affordability as a primary concern for voters and Mamdani’s victory as a template, it’s no wonder Democrats are seeking to capitalize on the issue, portraying Trump as the villain and themselves as the solution — despite Democrats’ pivotal role in the wealth-gouging inflation of the Biden years. After a period of downplaying the problem, Trump has pivoted, as demonstrated in his recent address to the nation. In that address, Trump acknowledged the affordability issues and pledged to revamp health care and Barack Obama’s “Unaffordable Care Act” and enact “the most aggressive housing reform plans in American history.”

Much of the blame for the unaffordability of housing lies at the feet of city and state governments and crippling restrictive zoning, lot-size, and construction regulations. But the degree to which the administration and the Republican-led Congress are successful in implementing policies that address the root causes of housing unaffordability —and the unaffordability of home ownership in particular — will have significant ramifications for the 2026 midterms and the future of the conservative movement.

Joshua Monnington is an assistant editor at The Federalist. He was previously an editor at Regnery Publishing and is a graduate of Midwestern Baptist Theological Seminary.