How Will Trump's Win Impact Rental Housing? Eight Issues to Watch.

Sponsored by: Madera Residential

Housing became a central issue on the campaign trail this year. Now that former President Trump has become President-Elect Trump, what could be the impact to rental housing providers and renters? Here are eight issues to watch below.

Plus: We’ll review the results of rent control ballot measures across the country — headlined by California voters overwhelmingly rejecting Prop 33’s attempt to expand rent control across the state.

Eight potential impacts on rental housing under President Trump

#1: Less Likely to See Tax Penalties Pushed on SFR Investors

While we’ve seen increasingly bipartisan attacks on larger single-family rental investors (including by VP-Elect Vance), it’s probably less likely we’ll see real movement — particularly with the GOP taking back the Senate. VP Harris had endorsed legislation to push tax penalties on any owner of 50+ single-family rental homes. That legislation was authored by Senate Democrat Sherrod Brown, who just lost re-election in Ohio.

I don’t think this will change strategies for big SFR investors, especially because single-family pricing remains unattractive for scattered-site operators. And this issue could easily come back, even by populist Republicans. So the “we’re building net new housing” strategy among SFR investors moving more heavily into the BTR space is likely to continue, I’d think.

#2: Less Likely to See Expansion of LIHTC

It's less likely we'll see expansion of the Low Income Housing Tax Credit program, though not totally off the board. (Just not something Trump has talked about.) In his first time, Trump put more focus on creating the Opportunity Zone program (more on that later in this piece) than on LIHTC or similar programs. He also pushed budget cuts on HUD, and that could return under Trump’s second term — particularly with a big push toward government efficiency.

#3: Building Housing on Federal Lands

We could see some federal lands repurposed for housing construction with "ultra-low regulation" as Trump has repeatedly pitched. Remember that only a small share of federal lands (primarily in the West) are suitable for housing construction based on location (i.e. not super rural), but anything helps. From his comments on the campaign trail, it sounds like Trump wants to require cities play by federal rules on permitting/entitlement in order to build housing on federal property.

#4: Bipartisan Push to Remove Regulatory Roadblocks to Housing

We could (and should!) see a big bipartisan push to remove regulatory roadblocks to housing construction. Lots of folks forget this, but back in 2019, Trump did launch the "White House Council on Eliminating Regulatory Barriers to Affordable Housing" -- targeting zoning, rent controls, building codes, impact fees, parking requirements, environmental reviews, etc. -- "because for many American citizens, the supply of available housing has not kept pace with the demand for housing by prospective renters and homebuyers.” But it wasn't launched until late in his presidency (2019) so it didn't get anywhere and it appears Biden Administration dropped it. Could Trump revive it? Seems like a logical first step.

Trump has also killed zoning "a killer," but at the same time, he probably won't go as far as YIMBYs want -- opposing to upzoning existing single-family neighborhoods. But there’s still a lot of potential progress to be had, even absent that key piece.

#5: Tariffs and Immigration Policy Could Push Up Construction Costs

We could see higher construction costs (likely leading to higher rents/prices for new construction, which in turn could make some construction less viable) if Trump pushes higher tariffs on materials as he's proposed.

And if he does somehow push through a deportation program, that would have a dramatic impact on construction labor (with immigrants representing large share of construction workforce) -- putting further upward pressure on costs. This could be a big headwind to supply if it plays out.

#6: Potential Extension of Opportunity Zones

President Trump signed the Opportunity Zone legislation into law in 2017, resulting in a significant boost in apartment construction in these zones. Trump has often boasted about the success of this program, and we might see him push to extend/expand it during a second term.

#7: What Will Trump Do with Fannie and Freddie?

It seems less likely we'll see a Trump Administration try to regulate apartments via Fannie Mae and Freddie Mac as the Biden Administration did or a push (as some made) to attach rent control with agency debt. Could we see Trump try to take Fannie and Freddie out of conservatorship and re-privatize them? And if so, could that result in (modestly) higher cost of capital but lesser risk of "strings attached"?

#8: Apartment Supply Will Almost Certainly Decline (Regardless Who Won)

Friendly reminder: Regardless who won this election, we were highly likely to see multifamily supply decline over the next presidential term. It's not for lack of trying. It's just that it takes time to get new housing built, and the current pipeline (plunging starts) points to reduced supply environment in 2026-27. Any impact from new policies will likely take 2-3 years to result in meaningful volumes of completed supply. Harris talked a lot about driving 3mm additional housing units above baseline, but that was highly unlikely to occur for the same reason (at least during a first presidential term) if the Biden years were the baseline. Trump will inherit a lower supply environment, especially for rentals, and that could put upward pressure on rents.

What About Those Rent Control Ballot Measures?

Rent control was on the ballot yesterday — mostly for Californians, as well as for one city in New Jersey. I reviewed those proposed measures in more depth in the prior edition of this newsletter, which you can find here, and I’ll just quickly recap results here.

• California voters not only rejected Prop 33 rent control expansion, but shot it down in resounding fashion (nearly 62% voting "no") -- indicating bipartisan alignment that rent controls backfire on renters. This was third time in 6 years CA voters have shot down rent control expansion. I wrote much more about Prop 33 in this previous newsletter.

• California voters appear to be fed up with seeing rent control expansion on the ballot -- so much so that it appears they’ve approved Prop 34, which would block Prop 33's backer (AIDS Healthcare Foundation) from a fourth attempt by requiring healthcare non-profits use taxpayer dollars on healthcare instead of unrelated political campaigns.

• Discouragingly, California voters rejected Prop 5, which would have lowered the vote threshold needed to pass local bond measures to fund housing and public infrastructure, from 66.67% to 55%.

• Voters in 3 cities outside San Francisco (Marin County) either shot down rent control expansion or rolled back existing city-level rent caps: Larkspur, San Anselmo and Fairfax.

• Berkeley, CA, approved tighter rent caps on eligible properties, but the most extremist parts of Measure BB (applying rent control to every property once 15 years old... as if developers can't read a calendar) presumably won't go into effect due to Prop 33 failing.

• Santa Ana, CA, enshrines an existing council-passed law capping renewal rent increases at just 80% of CPI, but makes no concurrent effort to cap expenses for property owners.

(Remember that current CA state law allows cities to apply rent control to older rentals but only on renewals, in addition to broader statewide rent caps passed in 2019.)

• San Francisco voters approved $8.25m+ in annual spending for “rental subsidies for affordable housing developments serving extremely low-income households.”

• Oroville, CA, voters approved a new 18-unit low-income affordable housing apartment community (with no city dollars!). Silly example of slowing housing supply by asking for voters to do what zoning ordinances theoretically should do without a public vote.

Outside of California:

• And in Hoboken, NJ, voters clearly didn't take the time to get educated like CA voters did -- shooting down a reform measure to strip vacancy controls by allowing property owners wanting to reset rents to market (for new renters) to pay a fee into an affordable housing fund. (Reminder that vacancy control is what socialist economist Assar Lindbeck famously called "the most efficient technique presently known to destroy a city, except for bombing.")

• Voters approved bond referendums for affordable housing in Rhode Island ($120m), Charlotte, N.C. ($100m) and Baltimore, MD ($20mm).

Build, Baby, Build!

And for anyone interested in real, lasting solutions and proven policies on rental housing, check out one of our recent podcast interviews with former Fannie Mae CEO Hugh Frater (Episode 6), Bellevue Mayor Dr. Lynne Robinson (Episode 5) or former Freddie Mac CEO David Brickman (Episode 7). And tomorrow in Episode 8, we’ll hear from Paul Thrift, CEO of the nation’s 13th largest apartment developer (as of latest NMHC rankings).

Disclaimer: The contents of this newsletter are for informational purposes, not investment advice. No recommendation or advice is being given.

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