In an address Wednesday at the World Economic Forum in Davos, Switzerland, President Donald Trump touted efforts to bolster home ownership, including his new restrictions on large Wall Street investors snapping up single-family homes and insisting that home values not be allowed to fall.
His remarks came as his administration focuses on the housing crisis ahead of the midterm elections in November, but the speech did not include many of the proposals he had previously touted and that many observers believed he would include.
“Housing affordability played a less central role in President Trump’s Davos speech than many expected,” Realtor.com Senior Economist Jake Krimmel said. “Still, the President used the forum to outline a handful of housing-related ideas and to frame what he sees as the key headwinds facing the market.”
In his speech, Trump noted affordability as an issue.
Executive Order Limits Wall Street Investors
“Homes are built for people, not for corporations, and America will not become a nation of renters,” said Trump. “That’s why I have signed an executive order banning large institutional investors from buying single-family homes. It’s just not fair to the public. They’re not—they’re not able to buy a house.”
On Tuesday, Trump signed the executive order limiting Wall Street investors from buying single-family homes that become rental properties.
“Homes are built for people, not for corporations, and America will not become a nation of renters,” Trump said. “That’s why I have signed an executive order banning large institutional investors from buying single-family homes. It’s just not fair to the public. They’re not—they’re not able to buy a house.”
The new order does not ban institutional home purchases outright, but limits conventional mortgage guarantees for such transactions. It would not impact cash buyers or investors who use financing that is not guaranteed by Fannie Mae and Freddie Mac, Realtor.com said.
In his speech, Trump reiterated his insistence that home values should not be allowed to fall in order to preserve the wealth of existing homeowners, who enjoy near record-high levels of equity.
“The house values have gone up tremendously, and these people have become wealthy,” he said. “Every time you make it more and more and more affordable for somebody to buy a house cheaply, you’re actually hurting the value of those houses, obviously.”
Trump Didn’t Float Many of his Ideas
Trump added: “If I want to really crush the housing market, I could do that so fast, and people could buy houses, but you would destroy a lot of people that already have houses.”
In his speech, Trump floated the idea of allowing depreciation, a yearly income tax deduction, to recover certain property costs over a prescribed period of time, for personal residences.
“The crazy thing is a person can’t get depreciation on a house, but when a corporation buys it, they get depreciation,” Trump said during the address. “Okay, here’s something we’re gonna have to think about.”
In the speech, Trump didn’t mention other ideas that the administration has floated to improve housing affordability, including ones to allow homebuyers to keep their old mortgage rate when they move, and offer penalty-free early withdrawal from 401(k) accounts to fund a down payment.
Under current law, a person can access 401(k) funds for a home purchase via a penalty-free loan or, in some cases, a hardship withdrawal.
Direct withdrawals before age 59½ usually incur taxes and a 10% penalty, but there are exceptions, such as a $10,000 first-time homebuyer exception for IRAs (not 401(k)s) and potential hardship rules for 401(k)s, depending on your plan, with loans being a common way to avoid penalties by repaying yourself with interest.
White House spokesman Davis Ingle told Realtor.com earlier this week that the president “will soon unveil new policy initiatives that will restore the American dream of home ownership.”
“President Trump pledged to improve housing affordability for Americans still reeling from Joe Biden’s economic disaster, and the Administration is committed to exploring every tool possible to deliver for the American people,” Ingle said.
