Trump To Deliver State of the Union as Americans Grapple With Affordability

President Donald Trump will deliver the State of the Union address on Tuesday night, at a time when millions of Americans are grappling with affordability and housing—something he has centered his administration on.

The annual speech before a joint session of Congress follows several months of ideas floated by Trump to make it easier to buy a home. The most prominent among them is a major ban on institutional investors he's sought to codify by executive order.

But Trump has also pitched a range of other ideas to improve the financial conditions of homeowners. In recent speeches, Trump has considered whether homeowners should be able to claim depreciation tax deductions on a primary residence.

An aide also suggested a plan to allow homeowners to pull money from their 401(k) to use for a down payment for a home without the current penalties. But Trump later said he does not like the idea, given how well markets are performing.

These actions come amid rampant pessimism in the housing market among young people. The National Association of Realtors® last year reported that the average first-time homebuyer is now 40 years old. Rising prices have also meant a slump in sales.

"Housing affordability is at a crisis level with the worst three readings in the last 25 years coming from each of the three prior years," said Danielle Hale, Realtor.com Chief Economist. "This has attracted attention from both sides of the political aisle and from the President himself."

Trump has said his goal is to make buying a house more attainable for young people. But he said he will avoid making moves that crash existing home values, such as some kind of supply-side surge.

Congress takes aim at housing

For its part, Congress has found some bipartisan momentum on housing affordability.

The House overwhelmingly passed the Housing for the 21st Century Act, which has 25 provisions aimed at easing access to financing, speeding home construction, and improving accountability of public housing authorities. The Senate must approve its own version before that can become law.

Lawmakers have introduced a series of other housing-related bills. A pitch to double the capital gains tax exclusion to allow people to sell a home without a large tax penalty—a frequent aim of NAR and other real estate groups—has over 100 co-sponsors.

And about a dozen states are considering changes in zoning at the local level that would allow more smaller homes to be built. While originating from both sides of the aisle, those proposals have been controversial.

Other policies flow to housing

Inevitably, other major decisions Trump touches on will affect the housing market.

The speech comes days after the Supreme Court struck down the tariffs that have become a bedrock of Trump's foreign policy. Many of the tariffs have affected building materials such as steel and lumber. Trump says he will institute them under other authorities.

Also, Trump has loudly criticized Federal Reserve Chair Jerome Powell, believing he has been too slow to bring down interest rates. Trump has picked a successor for when Powell's term ends in May. The course of interest rates could potentially bring millions back into the housing market this year.

Other proposals, such as a potential end to the government conservatorship of Fannie Mae and Freddie Mac, could also affect the mortgage market.