Donald Trump's destruction of Obama-era AFFH is purely a political play. It could end up costing American homeowners a lot more.
Donald Trump made a big deal of destroying one of Barack Obama’s housing policies, the “Affirmatively Furthering Fair Housing Act” (AFFH). The Trump administration rescinded the rule, but the decision probably won’t boost home values anytime soon.
The history of the U.S. housing market is one of segregation in many states. Barack Obama introduced the AFFH to compel jurisdictions to offer a more inclusive housing market.
A politically floundering Donald Trump, who is being scorched in the polls, is desperate to appeal to white suburban voters who have been abandoning him over the last few years.
Smashing up the AFFH is about as meaningless a move for the U.S. housing market as Trump could have made. That’s because he already suspended it in 2017.
Obama’s rule was mainly an inspirational addition to the 1968 Federal Fair Housing Act. Whether by fault or by design, the Act had no real enforcement mechanisms. Here’s what the Act tried to achieve:
… meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics.
The goal of the Act was to make it appear that the Obama administration was helping one portion of its base, without doing anything to inconvenience the people who bankroll it.
The problem with the rule was that, if locales did absolutely nothing, the worst penalty they could face is withheld funding. At the time, HUD Secretary Julián Castro said this would only ever be a “last resort,”
If you follow politics, you know that a “last resort” can mean a decade of non-compliance, or more, before anything happens–especially if the suburb in question generally votes for your party.
All Donald Trump is doing here is cultivate fears that liberals are coming for the leafy, affluent suburbs. Maybe some are–in fact, some definitely are–but it doesn’t matter.
Municipalities have the power concerning zoning–not the feds.
This means if your neighborhood doesn’t want anything other than single-family zoning, it’s probably all you’ll get.
You can find evidence where some home prices have been affected in the past by multi-family projects. Still, there is no indication whatsoever that this is a significant problem.
How do we know this? Because single-family home prices have been steadily rising regardless of the AFFH.
As America deals with the inevitable unrest from a record wealth gap, words from George Romney (the father of Mitt), seem as relevant today as they were in the 1960s when he was battling President Nixon:
Equal opportunity for all Americans in education and housing is essential if we are going to keep our nation from being torn apart.
By stoking the flames of racial divides, Trump risks hurting the housing market. His tendency toward escalation threatens to keep protests raging in urban centers like Portland, where home prices have been struggling and will likely fall further.
Nothing will upset the suburbs in Beverly Hills like Rousseau-inspired crowds strolling down the street, yelling, “eat the rich.” A couple of duplexes doesn’t sound too bad in comparison.
The U.S. housing market has many headwinds. Rampant joblessness, falling income, and a pandemic all pose a threat to property values.
The pandemic has also triggered a return to record low-interest rates and low supply, which is a tremendous updraft to mortgage demand and has many regions looking extremely bubbly relative to the economic fundamentals.
Do you know what wasn’t a big concern for real estate investors and homeowners alike? The former AFFH.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
Last modified: September 23, 2020 2:10 PM