Indeed, much of the credit for Donald Trump’s subsequent reelection points towards increasing disillusionment about the escalating cost of living. Homes in America saw their prices skyrocket by nearly 40 percent during the term of President Joe Biden, and rental prices marched steadfastly alongside. As of 2024, around 771,480 US citizens find stable shelter elusive, this figure stands as a worrying pinnacle. These issues appear to be highly prominent in states helmed by Biden’s Democratic counterparts.
In the case of California, for instance, the median house price has surged to over ten times the typical household income. Experts within the field consistently deem a ratio of three to five as suitable. According to polls, key voter groups in the 2024 election largely felt driven by the spiraling cost of living, and the overblown housing costs specifically. The largest expense for many families, namely mortgage and rent, incited voters to dismiss current leaders.
Following several vain threats and missteps, the administration initiated its much-discussed global trade war on April 2, which included imposing a 25% tariff on a variety of products originating from Canada and Mexico. However, specific exemptions were made for commodities such as Canadian timber and Mexican drywall – fundamental resources for constructing standard American single-family homes.
Had the tariffs fully materialized as outlined, the resultant increase in the expense of constructing a daily unit could have amounted to as high as $29,000. Given the narrow profit margin commonly seen in the sector, several construction projects would potentially come to a sudden halt. Still, this only offers a momentary respite; the tariffs currently enacted are projected to inflate the cost of constructing a new house by an average of $10,900. This is complemented by a hefty 41.6 percent enhancement in building material costs since 2020, contributed significantly by disruptions induced by the pandemic.
The fundamentals of urban economics maintain that a rise in vacancy rates compels rents to drop. Increasing these vacancy rates necessitates building additional houses. Although few cities have experienced recent building surges that have lowered prices, they are certainly outliers. A slew of new tariffs threatens to significantly elevate construction costs.
Other vital construction inputs such as iron and cement could also become considerably pricier, contingent on their countries of origin. Furthermore, the uncertainty surrounding tariffs has put a damper on many construction initiatives. This development has led to an exodus of several small-scale local developers from the market.
If escalating tariffs weren’t troubling enough, the administration’s large-scale deportation strategy could accelerate the housing crisis. As it stands, the construction industry already faces a daunting shortage of 250,000 workers. What’s more, even areas like Texas, which has remained relatively affordable due to continuous construction activity, could be hit hard.
Given these factors, expecting voter patience to last through 2026 could be seen as highly precarious. It is evident that the current administration must recognize this situation as a crisis of survival. The proposed measures lack coherence with the severity of the housing crisis.
The federal government doesn’t have substantial influence over zoning matters. Nonetheless, the concept of linking federal funds to local deregulation has garnered increasing approval. Several proposed bills condition the allocation of money for public utilities on local jurisdictions curtailing bureaucratic delays.
Moreover, the federal government might turn to leverage taxation. State and local officials possess the authority to manage vital factors like zoning regulations, permitting timelines, and impact fees. Fortunately, some state legislators are stepping up to meet this challenge.
Even California seems to be getting on board with these progressive changes. Regardless of what happens on a national level, the passage of these proposed bills will boost housing construction. The administration needs to pin its hopes on these state-level endeavors
The success of these efforts is vital for the Trump administration to avert worsening the housing crisis through their trade and immigration policies. These potential woes could see America thrust into yet another housing catastrophe if left unchecked.