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By Suzanne Blake
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A new homebuilding plan has emerged to help make the housing market more affordable for the everyday American.
The new plan to build “Trump homes” would allow entry-level homes sold via a pathway-to-ownership program funded fully by private investors. The tenants’ monthly payments would go to a down payment after roughly three years.
While some experts told Newsweek that the idea sounds promising, most expressed skepticism about how it would pan out.
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Why It Matters
Housing affordability remains difficult to nearly impossible for many Americans, especially if they live in certain high-demand real estate markets.
With the median home sale price set at roughly $428,000, according to Redfin, the Trump homes could usher in a new wave of homeownership for people who previously would not be able to make a full down payment.
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What To Know
The “Trump homes” idea has emerged from Lennar Corp and Taylor Morrison Home Corp, and builders are calling for a spree of entry-level homes to be sold specifically in a pathway-to-ownership program.
While funded by private investors, tenants would rent out the properties with their money adding up to a down payment after three years.
“The concept being floated by some builders is entry-level homes being sold to private investors who would in turn offer the properties purchased for rent,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “Renters would have the option after three years to purchase the home they're currently living in and apply prior payments to the down payment on the property.”
While it’s unclear how much support the proposal has moving forward, builders have discussed that the novel idea could be approved for as many as 1 million homes. It’s estimated that this would provide more than $250 billion worth of housing.
White House officials told Bloomberg that the plan is not being actively considered by the Trump administration, but full details have not been disclosed yet.
“We are encouraged by the thoughtful discussions between home builders and the administration that could help more Americans step into home ownership,” a Taylor Morrison spokesperson told Bloomberg.
Currently, many Americans are priced out of the housing market entirely due to sky-high prices, specific housing market supply shortages and lofty interest rates.
“We’re very well positioned to provide the affordable supply that the market needs when demand is ultimately activated by either lower interest rates or government-sponsored programs to enable affordability,” Lennar Chief Executive Officer Stuart Miller previously said in a conference call in December.
What People Are Saying
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “While there are almost no defining details of this initiative, the mere mention of an action plan to address affordable housing is promising. Home builders have found that it is far more profitable to build a 5,000 square foot home with top-end finishes versus four separate 1,200 square foot starter homes. Neither government nor tax subsidies have proven effective in effecting change in this trend, so the current administration is looking to private investment to make the change.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “On the surface, it seems like a reasonable idea. With many homebuyers struggling to save up enough for a down payment, a pathway to creating one through renting the property sounds appealing. At the same point, there are so many legal and financial aspects to consider of how the system would be implemented, which builders would qualify, who the private investors would be, and if thresholds for down payment attainment would remain the same or vary per property.”
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “I don’t see this gaining much traction, if any, because it effectively expands the role of investors as landlords, which is already happening today. Long-term, this could do more harm than good for many Americans. Investors are profit-driven, and those costs rarely disappear; they are typically passed through higher rents or purchase prices. While it may create an entry point for buyers who lack a significant down payment, I struggle to see how this model improves affordability or housing stability over time.”
What Happens Next
Fine-tuning the exact details of such a proposal could prove difficult, especially as the Trump administration has not publicly promoted any such program.
“As with everything, the devil is in the details, specifically the regulations around the initiative,” Powers said. “If there is one thing we see time and time again, self-regulation seems to always lose to profit motives. Only time will tell if this helps younger homebuyers or if it becomes a private version of failed public housing.”
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