Over the weekend, President Trump put out a post on Truth Social suggesting that his administration will use the government’s control over the nation’s mortgage finance system to help bring about 50-year mortgages for American homebuyers. The Federal Housing Finance Agency director, Bill Pulte, said that he and the agencies he oversees are “working on it,” and that this new product would be “a complete game changer.”
The announcement came days after several Democrats had a fairly strong showing in the off-year election. The common takeaway from all of these races, but especially Zohran Mamdani’s win in New York City, was that the successful candidates had made addressing the so-called “affordability crisis” a central part of their campaigns.
The affordability of housing, especially for younger Americans, is one of the most common complaints directed at our current economic setup, so it’s no surprise that the administration wants to at least appear to do something on that front.
But longer mortgages are not the answer, or even a meaningful step in the right direction.
At their core, the housing problems we face in this country all come back to one thing: there is an artificial shortage of housing. The shortages vary from market to market, but across the nation, there are simply not enough homes, condos, duplexes, and apartment units for everyone who wants or needs them.
As with any economic good, the artificial shortage forces prices higher than they would be if developers were free to build and offer as much housing as buyers demand. Meaning, as long as the constraints on supply remain in place, there will be a housing affordability crisis. This is inescapable.
Unfortunately, there is not one, straightforward, national policy causing the housing shortage that can be easily repealed by the president or Congress. There are a lot of causes, and many of them exist on the local level.
But the problem is also not so complex as to be a big mystery either. The leading causes are clear.
One major cause is zoning laws. In 1926, the Supreme Court upheld the authority of municipal governments to enforce zoning regulations—or to define what kinds of buildings developers are allowed to build in specific areas. Ninety-nine years later, it is a very common practice.
Now, if government zoning closely mimics the land-use that would occur in a free market, the discrepancy between what buyers demand and what developers can offer will be minimal. But that’s rarely what we see.
That is, in part, because zoning laws were intended, since the beginning, to block “unseemly” housing like apartment buildings in favor of idyllic single-family homes. But much of the shortages we’re seeing stems from the phenomenon often called NIMBYism, which stands for “Not In My Backyard.”
In short, while nearly everyone seems to agree that they want housing to be more affordable in a general sense, what it seems people actually want is to buy a nice but affordable house in a great area that then either never changes or improves, and then for the price of the house to climb higher and higher forever.
In other words, the wants of homebuyers and developers often conflict with those of homeowners, who want their neighborhoods to remain unchanged and for their homes to always appreciate in value. And, crucially, zoning laws give homeowners an avenue to block the development of new housing towards those ends.
As with any form of government privilege, it’s tempting to place all the blame for NIMBYism on the homeowners alone. But they’re just utilizing a tool that the government made available to whoever is organized and motivated enough to use it. The real problem is that government officials violate the property rights of landowners and developers, giving themselves and local interest groups a say over what other people are doing with their property.
Other factors contributing to and exacerbating the housing affordability crisis include environmental regulations, which—especially in states like California—make constructing new housing a significantly more expensive and time-consuming process. Really, any regulation that forces developers to obtain specific certifications and approvals, or to undertake new subprojects—often in ways that benefit well-connected groups—helps to contribute to the housing shortage, but the most onerous ones tend to be justified on environmental grounds.
These government policies tend to constrain the supply of housing, which, again, makes housing artificially expensive. And then, the government tends to use the fact that people are, rightfully, upset with this to justify demand-side subsidies like Section 8 vouchers, the HOME Investment Partnership Program, and Section 521 rental assistance on the federal level. These programs, and their state and local counterparts, fuel the demand for housing while leaving the artificial shortage in place, which again raises housing prices, forcing even more people to rely on government assistance.
It is a nasty cycle that has accelerated in the last thirty years as the government went out of its way to help get people into homes they couldn’t afford with mortgages they would never be able to secure without government backing—all magnified, of course, by the Fed’s artificially low interest rates.
So what’s Trump’s big plan for getting us out of this mess? Apparently, it’s to leave virtually all the various supply constraints and demand-side subsidies making housing artificially expensive in place, and then to add mortgages with longer payoff periods on top of it.
Government-backed, fifty-year mortgages will make houses more expensive with interest in exchange for lower monthly payments. And, although it’s impossible to quantify before the fact, they could easily worsen the problem by further fueling demand and encouraging people to buy houses they really can’t afford.
Addressing the artificial housing affordability crisis should absolutely be a top priority for any movement seeking to make meaningful improvements in this country. But until the policies that are actively creating the problem are abolished, no shiny new financial product will dig us out of this hole.
