Elections have consequences and this one may be one of the most consequential in modern history. With a new presidential administration taking power on January 20, 2025, NHC and our members are preparing for what that means and how to manage the opportunities and risks of the major changes to come. Some of our members will position themselves as the vocal and public opposition to the new administration. Others will enthusiastically embrace a new approach to regulation and policy. NHC will focus our energies on working with the Trump Administration where we agree, and opposing policies which we believe are counterproductive to our policy priorities.
As part of our policy agenda work, I have identified four areas that require examination and preparation. These are high value opportunities, top level risks, and a few current initiatives that are dead on arrival. Let’s examine each of these.
High Value Opportunities
1) Affordable Housing Credit Improvement Act (AHCIA)
AHCIA is our highest housing supply priority, creating up to 1.94 million additional affordable homes over the next decade. Passing the AHCIA would also support nearly 3 million jobs, $115 billion in additional tax revenue, and $333 billion in wages and business income, according to Senator Todd Young (R-Ill.). The current bill has 33 cosponsors in the Senate, including 17 Republicans, 16 Democrats, and one Independent. 272 members of the House have cosponsored the bill, 120 of them Republicans. In the scrum of lobbying to shape the new Trump tax bill, which will likely be decided during the first half of 2025, this is the most likely to be included, as it was already included in the Republican-passed tax bill in the House in 2024.
2) Neighborhood Homes Investment Act (Neighborhood Homes)
The Neighborhood Homes Investment Act would revitalize distressed urban, suburban, and rural neighborhoods with federal income tax credits, mobilizing private investment to build and rehabilitate homes for lower- and middle-income homeowners. It would support the construction or rehab of 500,000 homes over 10 years. Neighborhood Homes would create a federal tax credit that covers the gap between the cost of building or renovating homes and the price at which they can be sold, making renovation and new home construction possible. The bill has 98 cosponsors in the House, including 34 Republicans, and 16 cosponsors in the Senate, half of them Republicans and half Democrats.
3) Federal regulatory reform
To learn more about the likely Trump administration agenda for regulatory reform, you don’t have to go much further than the January 2021 paper released by HUD’s Office of Policy, Development and Research, entitled “Eliminating Regulatory Barriers to Affordable Housing: Federal, State, Local, and Tribal Opportunities.” While much has been made of Project 2025, this is the real thing. We will be writing more about this blueprint in the weeks ahead. The paper includes recommendations on improvements in the environmental review process and manufactured housing regulation. The report includes recommendations for a host of other federal agencies, as well as recommendations for state, local and tribal governments. NHC has also recommended major improvements to the Section 8 Housing Choice Voucher program as well as the HOME program.
4) Opportunity Zones 2.0
The nomination of former executive director of the White House Opportunity and Revitalization Council Scott Turner to lead the Department of Housing and Urban Development significantly increases the likelihood that there will be a reboot of the Opportunity Zone program. Early evidence from independent research indicates Opportunity Zone investment has led to meaningful increases in housing, jobs, and businesses, according recent testimony before the Senate Finance Committee by Michael Novogradac, a member of the NHC Board of Governors and founder of the Novogradac accounting and consulting firm. Through June 30, 2024, 1,897 Qualified Opportunity Funds (QOFs) tracked by Novogradac have raised $38.30 billion. Novogradac identified 185,436 homes that have been built by funding from QOFs. Nashville, Washington, Phoenix, Austin, Cleveland, Los Angeles and Charlotte have all seen more than 5,000 homes built with QOF funding. There’s a lot more that can be done. We look forward to working with Secretary Designate Turner, Senator Tim Scott (R-S.C.) and others to increase the ability of the program to more directly address the affordable housing crisis.
Top level risks
1) Trade war
One of President Trump’s most vocal campaign commitments was to impose a 10–20% across-the-board tariff on all imports, with an additional 60% tariff on all imports from China. I fully expect him to act on this commitment as it has been widely reported to be a central focus of his vetting choices for Treasury Secretary and other key economic positions. What we don’t know – can’t know – is whether these actions will result in trade concessions and improvements in our balance of trade, or in an uncontrollable trade war that will fuel inflation and raise the cost of home building. Trump’s trade policies in his first term were followed by similar policies during the Biden administration. In August, the U.S. Department of Commerce raised tariffs on imports of Canadian softwood lumber products from the rate of 8.05% to 14.54% following its annual review of existing tariffs.
2) Deportations of construction industry workers
According to the National Association of Home Builders (NAHB), immigrants make one in four construction workers. The share is significantly higher (31%) among construction tradesmen. In some states, reliance on foreign-born labor is particularly evident, with immigrants comprising 40% of the construction workforce in California and Texas. These numbers include plasterers and stucco masons (64%), drywall/ceiling tile installers (52%), painters (48%), roofers (47%), and carpet/floor/tile installers (46%). A third of all carpenters and 41% of construction laborers are of foreign-born origin, according to NAHB.
One well-publicized ICE raid on a construction site would have a devastating impact on the construction industry, as tens of thousands of foreign-born workers would stay home, afraid of exposing themselves, friends, or family members to deportation.
3) Tax penalties on institutional investors in single family rental (SFR) housing
Vice President-elect J.D. Vance has been an outspoken critic of institutional investors in single family rental housing, saying that “they completely crowd out the availability for homes for people who want to just buy a piece of their community.” During his campaign in 2021, he blamed institutional housing investors for hurting the middle class and keeping home buying out of the reach of potential first-time homebuyers. “When these hedge funds take special government privileges and go and buy up all the single-family homes, what they’re doing is destroying wealth in this country.” Given similar views of Senator Elizabeth Warren (D-Mass.), we expect this to be the topic of significant interest in 2025. Major institutional investors like NHC members Pretium and Invitation Homes have already pivoted to build to rent units, which NHC supports. Pretium has also begun working with nonprofit housing organizations to sell rental properties to first time homebuyers. A continuation of this trend more broadly is likely to blunt efforts to shut down the industry by a populist bipartisan coalition.
4) 1974 Impoundment Control Act
Last June, The Hill reported that President Trump said he “will do everything I can to challenge the Impoundment Control Act in court, and if necessary, get Congress to overturn it… I will then use the president’s long-recognized impoundment power to squeeze the bloated federal bureaucracy for massive savings.” Restoring impoundment power “is the only way we will ever return to a balanced budget.”
The Impoundment Control Act of 1974 was enacted in response to President Richard Nixon’s refusal to spend money appropriated by Congress for programs he did not support. The controversial practice had been used by Presidents Harry Truman, Dwight Eisenhower, and John F. Kennedy, with significant congressional opposition. Under Nixon however, Congress was able to make the practice illegal over his veto. Under the Act, the president can only impound funds for 45 days unless Congress votes in support of his rescission. If Congress doesn’t act, the funds must be spent. President Trump could declare the Act unconstitutional and impound hundreds of billions of dollars of funds for programs he opposes, leaving it to the courts to reconsider the act.
Dead on Arrival
1) Affirmatively Furthering Fair Housing (AFFH)
The Obama Administration issued an AFFH rule for HUD in 2015 and the Trump Administration repealed it in 2020. A new rule was proposed by HUD in 2023, with significant improvements to the Obama rule that made it easier to manage for state and local recipients of federal funds. AFFH is required under the Fair Housing Act of 1968. One of the recommendations of Project 2025 is the repeal of the AFFH rule, a concern often raised by progressive activists. There is no need. The Biden Administration already killed the rule itself. Last April, 290 federal, state and local housing and civil rights groups including NHC, the National Association of REALTORS®, and the National Community Stabilization Trust the wrote to President Biden to “implore the White House to follow through on its commitments and release the final AFFH rule as soon as possible.” In May, several major civil rights groups including the NAACP Legal Defense Fund, the National Urban League, and the National Fair Housing Alliance, as well NHC met with senior Biden Administration officials including Domestic Policy Council Director Neera Tanden to urge the new regulation be issued before it would be subject to the Congressional Review Act, which would require the rule be substantially changed in order to be proposed again by a new administration. The Biden Administration refused to issue the rule in time, effectively killing it.
2) Community Reinvestment Act (CRA) modernization
Efforts to modernize CRA go back over a dozen years, necessitated by the advent of interstate banking, internet banking, and now mobile banking. In 2017, the Trump Administration began a process of issuing a new rule, which was ultimately repealed by the Biden Administration. Implementation of the new rule was halted by a lawsuit filed by the American Bankers Association, Independent Community Bankers Association, and other banking trade groups earlier this year. If the court rules on the case before federal regulators formally withdraw it, no CRA modernization is ever likely to be done short of new legislation, which is highly unlikely under almost any realistic scenario.
3) Basel III Endgame
NHC led a coalition of civil rights organizations, affordable housing advocates, and housing industry trade groups, to raise urgent concerns to the banking regulators about how the original Basel III Endgame proposal could have unintentionally harmed already underserved communities. Federal regulators listened to our concerns and announced they would repropose the rule consistent with our recommended changes. However, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra halted the effort by threatening to vote against the rule as a member of the FDIC Board. The new rule would have been a significant improvement and would likely have received bipartisan support from the Federal Reserve Board of Governors. With the new administration, any effort to complete the Basel III capital rules is dead.
4) Nearly everything CFPB Director Rohit Chopra has said and done
That sounds harsh, but Director Chopra has been an outspoken opponent of the banking industry and a lightening rod for the financial services industry. I expect the new leadership at the CFPB to repeal nearly every action taken by Director Chopra before its first year is complete. My hope is that new leadership at CFPB will build broad consensus for its actions, narrowing the path of the pendulum that has cost financial institutions millions of dollars retooling every four years with each change in administration.