The World Economic Forum annual meeting kicks off Monday in Davos, Switzerland. President Donald Trump is scheduled to make a speech there on Wednesday. In it, he will reportedly announce details of a plan to allow Americans to tap their 401(k)s for a down payment on a house, without a penalty.
Many economists are skeptical that this would do much to improve housing affordability, as they have been with other proposals Trump has offered recently, including 50-year mortgages and a ban on institutional investors buying single-family homes.
“It makes a lot of sense that all these proposals are just coming out right now because we are in the midst of a housing affordability crisis,” said Chris Salviati, chief economist at Apartment List.
He said housing has been an issue for a long time. But it’s gotten increasingly unattainable for many people in the last five years.
“Now more than probably at any time in recent memory, housing affordability is kind of a top-of-mind issue,” Salviati said.
But he said some of the proposals the president has thrown out so far could actually exacerbate the problem, by giving people more purchasing power.
“That would, if anything, potentially even drive prices up further by bringing more demand into the market,” he said.
And there’s already more demand for housing than supply.
Jenny Schuetz, head of Arnold Ventures’ Infrastructure portfolio for Housing, said low supply is why it’s gotten so expensive to buy.
“There aren’t enough homes to go around,” she said. “The problem that the federal government has, both the administration and Congress, is that they don’t have a lot of levers over supply.”
Local governments in cities and towns are the ones with the most control over how much housing gets built.
Vanessa Perry, a professor of strategic management and public policy at the George Washington University School of Business, said local officials could help improve housing affordability by making it easier to build more homes more quickly.
“Anything that could be done to remove some of the zoning restrictions that exist in many markets across the United States that would have a major impact. It would allow developers to come in and be able to sort of increase the density, use land more efficiently,” Perry said.
But Lisa Sturtevant, chief economist at Bright MLS, said getting people to support those kinds of changes is often a hard sell.
“We did a survey recently that showed that … the vast majority of people agree that housing affordability is a big issue,” she said. “But when you ask them, ‘Is a good solution to allow your local community to build more housing in your community?’”
A lot of people say no.