In a recent discussion on Varney & Co., Noble Black, a broker from The Corcoran Group, analyzed President Donald Trump’s housing affordability plans and the current state of the market. The spotlight was on a controversial proposal from the Trump administration aimed at allowing homebuyers to withdraw funds from their 401(k) retirement accounts to make down payments on homes.
While onboard Air Force One returning from the World Economic Forum in Davos, Switzerland, President Trump expressed reservations about this proposal, stating, “I’m not a huge fan.” He acknowledged that while others may support the idea, he believes the performance of 401(k) accounts should take precedence. “You know, 401(k)s are up 80%-90% in some cases,” he remarked, emphasizing his preference to see retirement funds maintained for long-term growth. Trump underscored his satisfaction with the current success of 401(k) investments, which have reportedly seen an approximate 88% increase over the past year.
This discussion preceded the formal announcement of the proposal, which was framed as a part of a broader initiative to enhance homeownership affordability. Kevin Hassett, Director of the National Economic Council, highlighted the stark rise in homeownership costs, noting that the typical monthly payment has doubled for ordinary families, and down payments have surged from about $15,000 to nearly $32,000. The administration’s intention to allow 401(k) withdrawals as down payments was expected to be a significant aspect of their affordability efforts.
During his speech at the World Economic Forum, however, Trump chose to focus on other parts of his affordability agenda and did not specifically address the 401(k) initiative. He called on Congress to impose a 10% cap on credit card interest rates for a year, highlighting the rising credit card debt as an obstacle for Americans saving for home down payments.
In addition to these proposals, Trump announced his plan to limit institutional investors from purchasing single-family homes, arguing that this practice is a contributing factor to rising housing prices and unfair to the general public. This proposed cap on credit card interest rates, however, has faced opposition from the financial services sector, which argues that such restrictions could limit consumer access to credit and potentially trade off rewards and perks for existing cardholders.
Criticism has also emerged regarding the proposed ban on corporate purchases of single-family homes. Investors cautioned that this move could lead to higher home prices without increasing housing supply, contending that corporate investment has aided in the construction of new homes and enhanced the overall housing market.
As the administration navigates these multifaceted housing policies, the interplay between maintaining robust retirement funds and facilitating homeownership continues to be a focal point of debate.
