Trump issues executive orders to tackle housing supply and demand
These threaten to undermine congressional legislation passed just a day earlier
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[NEW YORK] US President Donald Trump on Friday (Mar 13) released two executive orders aimed at tackling the nation’s housing crisis, a day after the Senate passed a significant package of Bills, and before the midterm elections, in which affordability will be a key issue for voters.
One order aims to increase housing supply by loosening regulations that have been blamed for driving up costs and slowing the production of new housing. The other loosens lending rules for community banks, making it easier for homebuyers and builders to borrow, according to fact sheets released by the White House.
The pair of orders focuses on both the supply and demand sides of the issue. They threaten to undermine the congressional legislation, the most significant housing package in 36 years, because they risk adding another complicating factor to what are already tenuous congressional negotiations.
While the bipartisan package passed the Senate by a vote of 89 to 10, House leaders have called for a conference in which differences could be hammered out before taking a final vote.
Trump’s support for the legislation has been muted, as he indicated he supports housing legislation. But he has also said he will not sign any legislation until Congress passes a Bill containing voter restrictions, which is unlikely to pass.
The executive orders, which bypass Congress, add another layer of uncertainty because they may indicate that Trump sees a way to outmanoeuvre the legislative branch.
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One executive order directs various federal agencies to identify and cut environmental and other regulations and permitting requirements that delay construction. Onerous oversight rules have been blamed for high building costs and delays. By loosening federal oversight, opponents of new developments would have fewer ways to challenge projects, something that can lead to delays and higher costs.
The order directs agencies to review, revise, simplify or eliminate rules and permitting requirements addressing stormwater, wetlands, energy and historic preservation. The executive order also provides incentives to communities that speed up state and local permitting processes, curb environmentally green building codes and reduce design mandates.
The other executive order aims to reduce lending rules for community banks, which are blamed for driving up mortgage costs, limiting borrowers’ access to loans and weakening the role that smaller banks play in mortgage lending.
The order calls for modernising and streamlining regulatory and documentation requirements; updating appraisal recommendations; revising underwriting guidance; and encouraging construction lending.
In January, Trump issued an executive order to curb the role that institutional lenders played in the single-family housing market. He also directed mortgage giants Fannie Mae and Freddie Mac to buy back mortgage-backed securities, a move that could bring down interest rates.
These executive orders are broader in scope, tackling the supply shortage, which is widely considered the root of the housing crisis. The United States has a shortage of as many as seven million housing units, according to some estimates.
Home prices are still about 50 per cent higher than they were at the start of the Covid-19 pandemic, and rents in December were still up about 17 per cent from December 2019, making housing affordability a primary concern of many voters. NYTIMES
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