Democrats' midterm victory could bring a new wave of housing legislation to Washington as Americans continue to struggle with high home prices and elevated mortgage costs. The housing market today has left many prospective buyers and sellers on the sidelines. In Home Depot’s most recent earnings call, CFO Richard McPhail said America is facing “frozen housing market conditions.” However, now that Democrats won control of both the House and Senate in Tuesday’s midterm elections, prospective homebuyers are hopeful the tide could turn.
Senate Democratic Leader Chuck Schumer outlined a five-part housing agenda earlier this year focused on lowering rents and increasing homeownership, and new congressional majorities could give Democrats the ability to turn some of those ideas into legislation beginning in January. The housing affordability crisis has increasingly become a problem for both buyers and sellers. High mortgage rates have made monthly payments considerably more expensive for prospective buyers, while existing homeowners with much lower rates have had a financial incentive to stay put rather than sell and take out a new mortgage at today's higher rates.
The resulting "lock-in effect" has contributed to unusually low turnover and inventory. At the same time, years of inadequate construction, particularly of lower-cost starter homes, have left the country facing a persistent supply shortage. In the short term, there will probably be fewer changes than prospective homebuyers might hope.
Congress cannot simply order mortgage rates lower or force homeowners with ultra-low pandemic-era mortgage rates to sell. Democratic control does, however, change which housing bills will receive committee consideration and floor votes. It could also put housing near the front of the new Congress' affordability agenda.
There will need to be a constructive approach to bringing incentives and supply into equilibrium.” After the election, likely House Speaker Hakeem Jeffries said Democrats were "laser-focused on addressing the affordability crisis that has been crushing everyday Americans." And there is reason to think housing could produce more actual legislation than some other Democratic priorities. Increasing supply is likely to be central to practically any Democratic housing agenda. Schumer's Opportunity Starts at Home agenda explicitly calls for more housing construction, alongside policies to address rents and large corporate investors.
It squeezes every other aspect of your life.” Democratic Senators Amy Klobuchar, Lisa Blunt Rochester and Tim Kaine also introduced the Housing Supply and Affordability Act this year. The bill would establish a competitive federal grant program for states, cities and regional planning agencies developing housing strategies. Beyond just increasing supply, progressive Democrats could push Congress considerably further.
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