all will be watching this Bryna Godar, thanks very much. Thank
you. The housing crunch, especially for affordable
housing, is at crisis levels, according to experts. How might
the incoming Trump administration help or hurt the
need? We turn to UW-Madison professor of urban planning Kurt
Paulsen. Thanks for being here. >> Thanks for having me.
>> So what is the scope of the crisis in the housing system
here in Wisconsin? And nationally?
the national trends, which is that home sales are down year
over year since the pandemic started. That means there's just
a lot less inventory for people to buy, and prices are going up.
When you combine prices going up with higher interest rates, it
means that for your starter home, your first time home
buyer, millennials, Gen Z, younger workers or seniors who
want to move down to some something smaller, there's just
no product available and anything that's available is
really expensive. And so we see it in the trends in Wisconsin,
which is that we have really low home ownership rates for our
workers under the age of 30. On the rental side, of course,
rents have gone up significantly 20 to 30% over the last couple
of years. Add to that the crisis is that the cost of building
anything new has gone up 40% since the pandemic, so it really
is a perfect storm where you have rising prices, rising rents
and not rising incomes at the same level so that middle class
families can't afford to buy a home. First time homebuyers
can't afford to buy a home, and most lower wage workers can't
afford any decent rental housing anywhere near where they want to
live. >> That is a crisis. Yeah. So
the incoming Trump administration has argued that
mass deportations will result in more housing and drive down
costs. How accurate is that assessment?
research from Harvard and other universities that show that the
rise in housing prices really preceded the rise in
immigration. So the immigrants driving up house prices is not
true. On the other side, we have to recognize that the
construction workforce is 20 to 30% immigrants. And in
particularly high cost states like Texas or California, but
also here in Wisconsin, you have a significant shortage of
workers in construction and a substantial portion of the
workforce is immigrants. So mass deportation, if it's actually
carried out, would lead to a significant worsening of the
labor shortage in housing. And construction, which would also
tend to drive up house prices. And of course, the big issue
turns out to be whether tariffs are inflationary and that might
lead the Federal Reserve to have to raise interest rates to try
to reduce inflation, which makes housing less affordable.
>> Tariffs also play into the supply of building materials.
Yes. How so? >> So one way to think about it
for your listeners is about 50 to 60% of the cost of any house
is the materials and the labor that go into it. So that's
everything from gypsum board, drywall, lumber, steel,
electrical appliances, electrical transformers and then
across the board tariff would also raise housing prices
because those are significant inputs into housing
construction. Now, we did see in the first Trump administration
tariffs on Canadian lumber, which the Biden administration
maintained and the estimates are that that adds 15 to 20,000 to
the cost of a home. But across the board, tariffs that would
also affect cement and steel and all the components that go in,
could also drive up housing prices.
>> Wouldn't the tariffs that have been talked about under the
Trump administration be at an even higher rate than the
existing ones? estimates are that he would put
10 to 25% across the board tariffs, depending on whether
it's Mexico or China. And the truth is about 15 to 20% of the
inputs into construction are imported materials.
>> What what federal programs targeting affordable housing
>> So it's somewhat difficult to predict based on what they've
said in project 2025 and their plans. So it's important to
understand there's two big kind of buckets of affordable housing
programs. The first is on the production side and that's the
housing tax credit. And we think that one's safe because that has
strong bipartisan support. In fact, we would love to see that
strengthened and increased. But of course, that's expensive. And
it's going to compete with other priorities in the budget. On the
helping people to afford their home. The main demand side
program is the section eight program for rental assistance,
and that covers the needs of about 1 in 5 of our lowest
income households. And in the project 2025 documents they have
talked about adding work requirements and time limits to
these programs. And for many of our working families at 30 or
$40,000 of income and below this, housing assistance is a
vital lifeline. And so if there are these significant cuts to
HUD assisted housing, you can expect to see homelessness and
housing insecurity really increase.
cutting regulations or taxes help home builders and offset
the kind of need for housing stock?
carefully about what are the regulations that we want to
reduce. Now, the truth is that local government land use
regulations that kind of require you to build a large house on a
large lot, that's a significant contributor to house prices
going up. So if we could find some way to incentivize local
governments to approve more housing, that would really help
us on the supply side and on the price side.
administration kind of listen and understand the voice of the
experts, like yourself and others around all of these
issues? differently, which is that even
Red state governors and red state mayors recognize that they
have a housing affordability crisis. They have tremendous
portions of their budget that come from the federal governmen,
whether it's housing assistance or community development block
grants and so I think we can ask red state mayors to be part of
the voice, to explain to say that listen, housing
affordability, the housing crisis affects rural areas,
urban areas, red states, blue states. And so we're kind of
hoping that there's that bipartisan consensus that says
we have to do something and we can't just cut our way to
housing affordability. housing affordability.