If 2016 was characterised by political shocks and a yearning for a past that never existed, 2017 looks to be the year when politicians who promised to protect the interests of the ordinary household show their true colours, and reveal themselves to be part of, and only interested in, the elite.
In the US, housing looks set to suffer under Donald Trump’s flailing administration due to wilful neglect of core issues as well as unforeseen side effects of other policies.
One of the first things Trump did on becoming US president was to make a huge number of middle-income families considerably worse off. One of Barack Obama’s final decisions before leaving the White House was to cut Federal Housing Administration (FHA) insurance premiums by 0.25%, saving the average household about $500 (£400) a year if they have a mortgage. The effect was immediate: total mortgage applications fell 3.2% on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association. In addition, there was a 13% drop in FHA applications – a direct result of the Trump administration reversing Obama’s cut in FHA premiums just hours after the inauguration. This affects mainly lower-income families making their first steps from renting to home ownership: $500 may seem like a small amount to some, but in many cases, it is the difference between meeting a mortgage payment and not.
Trump’s executive order on immigration and open support of mass deportation will also have a knock on effect on housing. A lack of housing supply in many areas of the US is causing huge issues and hiking rent and sale prices on houses and, as in the UK, rather than address the lack of construction skills in the workforce, Trump has opted to crack down on undocumented migrants and threaten those residents with green cards with deportation at airports across the country. To increase housing stock, you need builders. Deporting them means depriving the US of skilled workers who can address this issue. Forbes calculates that since the financial crash, the US has built half as many homes as it needs. To meet supply requires an above normal rate of construction for at least four years. Whether the US has enough construction workers to build these homes, and a gigantic wall on the border of the US and Mexico, remains to be seen.
Trump’s nominee for the Department of Housing and Urban Development (HUD), the amateurish Ben Carson who has yet to be confirmed by the Senate, has done little to inspire confidence in the administration’s housing policy. Questioned about his intentions for HUD, Carson said he planned to cut spending hugely, reduce government assistance programmes, but also increase the work HUD does (without detail) – which seems an impossibility.
But America also has a huge problem with evictions and foreclosures: Matthew Desmond’s book Evicted details the extent of the problem, focusing on a number of case studies to show that, whereas previously evictions were rare enough to draw a crowd in a neighbourhood, now an entire industry has evolved to force people from their homes. Desmond argues that poverty will persist as long as people are forced from their homes: without stable and secure shelter, it is impossible to build a proper life for your family. Your children cannot concentrate in schools, keeping a job becomes impossible if you’re simultaneously shunted from office to courtroom to office and back again trying to keep a roof over your head. Millions of Americans are evicted each year as they struggle to make rent: these people are the true forgotten poor, but currently they’re left with a president who made his wealth in real estate and is unlikely to be remotely sympathetic.
Trump himself was a nightmare landlord in New York in the 1980s, buying an apartment in 1981, and battling to evict tenants, cutting off heat and water in an attempt to run the residents out of the building. He has personal experience of the eviction process, and has shown that when he fails to achieve his goals, tantrums ensue: a history of failed evictions will sting – Trump’s attitude towards this epidemic will be to support it.
Hardly surprising then, that the cumulative effects of Trump’s current policies and attitudes towards housing and related issues look set to further impoverish the poorest, but also make life more difficult for the lower-middle class Americans who feel they’ve worked hard but found their wages stagnating and life more precarious.
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