Will Trump’s ideas to bring down housing costs work?

The Trump administration has floated a flurry of new housing policies — from longer mortgage terms to cracking down on corporate buyers of single-family homes — that officials hope will ease the housing cost burden on everyday Americans.
But will they? And can the federal government really tackle a problem largely determined by local and state governments?
Here is a look at a few of Trump’s housing proposals.
Perhaps the splashiest of Trump’s proposals, floated last November by Federal Housing Finance Agency director Bill Pulte, was to create a new mortgage loan product with payments over the course of 50 years, instead of the typical 30.
At first glance, the idea could make sense. By spreading a home loan over a longer period of time, home buyers would have smaller monthly payments, theoretically lowering a key barrier to homeownership. It’s the same principle that drove the 30-year mortgage to great popularity in the 1960s and made homeownership accessible to working and middle-class families who couldn’t simply buy a house with cash up front.
But stretching a mortgage across 50 years would likely not work as effectively, said Tom Callahan, executive director of the Massachusetts-based Partnership for Financial Equity, a nonprofit that aims to close the racial wealth gap.
The typical first-time home buyer in the United States is 40 years old (Massachusetts has one of the lowest homeownership rates among people aged 25 to 34), meaning a 50-year loan would stretch into their 80s or 90s before they’d own their home free and clear. For that reason, some politicians and advocates have criticized the proposal as creating “generational debt” as opposed to “generational wealth.”
Also, said Callahan, longer loan terms mean more interest payments over time.
For example, if someone were to purchase a $500,000 home with a 6.1 percent interest rate on a 50-year mortgage, they would end up paying roughly $1.1 million in interest over the life of the loan, nearly twice the $590,000 they’d pay on a 30-year loan for the same house. On the typical home in Greater Boston, which costs over $800,000, the interest would be closer to $2 million with a 50-year loan.
“Extending the term of the loan is more of a Band-Aid than a real solution,” said Callahan. “It’s possible some more people could buy homes if monthly payments were cheaper under this scenario, but those people are going to be carrying these loans around for the rest of their lives.”
What’s more, Callahan said, those lower payments may serve to increase demand, which, barring a flood of new supply, would send home prices soaring and offset monthly affordability gains with higher price tags.
Some banks — including Massachusetts-based Needham Bank — do offer 40-year mortgages, but these products are not widely used because banks have a harder time selling longer-term mortgages to private investors.
Perhaps realizing the various challenges, Pulte has since backed away from the 50-year mortgage proposal.
Earlier this month, Trump instructed the government-controlled mortgage companies Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, a move he said would lower interest rates and make home buying more affordable.
Fannie and Freddie help the flow of the housing market by purchasing mortgage loans from banks and mortgage finance companies, refilling their coffers so they can make yet more loans.
The move, which would roughly double Fannie and Freddie’s holdings but remains a small slice of the overall mortgage market, has nudged interest rates downward: The average rate on a 30-year fixed-rate mortgage was 6.06 percent the week of Jan. 15, down from 6.16 percent the prior week and from an October 2023 peak of 7.79 percent, according to Freddie Mac.
The rise in interest rates at the start of 2022 has contributed significantly to the struggle of home buyers in Massachusetts, because it means they have to grapple with both sky-high prices and high monthly payments. It also discourages homeowners with low mortgage rates more typically seen prior to 2022 from selling. Ultimately, that has sidelined prospective buyers and sellers alike.
But just targeting mortgage rates, said Adam Guren, an associate professor of economics at Boston University who studies the US housing market, ignores the underlying dynamic that drove house prices so high in the first place: A shortage of supply.
By trying to make it easier to buy mortgages more affordably without addressing the country’s massive supply problem, he said, Trump’s moves would effectively create more prospective home buyers without increasing the number of available homes they can buy.
In a place like Massachusetts, where officials say the state needs to build 222,000 new homes by 2035 to meet demand, that could lead to home prices soaring even higher.
“We have a housing cost problem because we have underbuilt housing since the [Great Recession],” said Guren. “The federal government can’t just wave a magic wand, and things will be more affordable, which is what these policies seem to be aimed at. This is an almost two-decade housing supply hole we have dug for ourselves, and you don’t get out of it on an electoral timeline.”
Trump also said recently that he would move to ban institutional investors like Blackstone from purchasing single-family homes.
The role of institutional investors in the housing market has long been debated. That debate has grown in recent years, as large-scale investors have increasingly targeted single-family homes in Sun Belt cities like Atlanta and Phoenix.
Typically, when those investors purchase single-family homes, they put those homes on the rental market, reducing the supply of homes for purchase and keeping more residents renters.
Across the nation’s overall housing market, economists say the impact of those investors is relatively minimal; so-called institutional investors, the country’s largest investors, such as hedge funds, only owned about 2 percent of single-family rentals in the United States.
And they’re not generally a big factor in Greater Boston, where high costs and high variation in the type and age of housing keep big players away; investors here tend to be smaller landlords who own a handful of properties.
In some cities, though, their presence is much larger. Institutional investors owned 25 percent of single-family rentals in Atlanta in 2024, 21 percent of those rentals in Jacksonville, Fla., and 18 percent in Charlotte, N.C., according to a report by the US Government Accountability Office.
Should Trump’s ban on those investments come to fruition, Guren said, it could be helpful in those markets where investors are most active, freeing up those homes to be purchased by families, though the move could also drive up rental costs by reducing the number of rentals on the market.
But using his executive might to actually build more housing, Guren said, would be far more effective.
“It’s a good thing that [Trump] is trying to find a way to address housing costs,” said Guren. “His energy would be much better spent figuring out how to deal with local zoning regulations that restrict housing supply.”