Does the President Have An Impact on Housing? Here’s What 30 Years of Data Says.

We’re a little less than three months away from a presidential election that’s proven to be as dramatic and hectic as anyone could imagine. Four years ago, I wrote an article in BiggerPockets Wealth magazine (since discontinued) about the impact a presidential election has on the housing market in that given year. 

It turns out that I could not find much evidence suggesting that the housing market moves in one way or another based on election years. The stock market tends to react. Bond yields sometimes. But not housing.

Now that we’re knee-deep in another election, housing has become a more prominent issue this time around due to mortgage rates, high prices, low supply, expensive construction, and homelessness. Vice President Kamala Harris spent last Friday in Raleigh, North Carolina, promising to tackle the housing crisis with a $25,000 downpayment assistance program, incentives for developers, and to go after corporate landlords. On the other side of the aisle, former President Trump has sounded off on the Federal Reserve and his allies have gone as far as suggesting to abolish the central bank entirely.

Both candidates are making housing a campaign issue, but saying “I’m going to lower prices” or “I’m going to abolish the Fed” are just words. Neither candidate has laid out an actual plan on how they’ll do each thing, and that makes you wonder if they even could do each thing.

But then, despite the lavish promises, I started to wonder if there’s actually anything a president can do to impact housing. 

So, here’s what I found. I began researching to see if there was any correlation between the state of housing and the policies created by each president over the last 30 years. I chose 30 years because President Bill Clinton was the first post-Cold War president, marking the beginning of the modern era where the issues we deal with today have largely been the same. 

In my analysis, I pulled key economic statistics that paint a colorful picture of the housing market, ranging from median sales prices to homeownership rates. Most of the data is monthly, but for some, I used quarterly information. The span of time for every dataset starts in January 1993 and ends in January 2024.

This story is divided into four parts, all of which provide better insight into the intrinsic realities of the housing market and the role each government entity plays, including the president themself.

The Fundamental Story of America’s Housing Market

The reality is that the housing market is driven by supply and demand like any given capitalistic free market. If you look at housing prices through each term, you’ll find that it’s just an upward trajectory without any real variation.

Besides the 2008 financial crisis and a remarkably stable market under President Trump, home prices kept on moving up from Clinton to Biden. There’s nothing here to suggest any single president had an impact on housing prices.

What we do know is that housing prices are elevated as we speak because of a severe undersupply of new construction in the United States that began around the beginning of the Great Recession. Below is how housing starts performed under each president.

What stands out to me is that housing starts mirror the general trend of housing prices through each president’s term. President Obama had consistent growth in housing prices and starts. Bush’s price downturn midway through his presidency is also showing up in the housing starts. But, of course, this is also a product of the general economic environment. Not necessarily the president himself doing anything (for better or worse).

Meanwhile, another indicator that is pretty suggestive of how little the president impacts housing is homeownership rates.

Since 1993, homeownership rates have been relatively flat, ranging from 63-69%. The remarkable stability also puts a dent into another topic: the so-called increasingly destructive role of corporate landlords. The homeownership rate counts the number of owner-occupied units as a percentage of all occupied housing units. 

What does that mean? It means most Americans own and live in their homes. If Wall Street is supposedly the great, looming threat sapping up all of the supply, they’re doing an awful job at it.

In terms of what each president does for landlords on a core level. The answer is not too much. Rental vacancies have ranged from 11% under President Obama to as low as 5% with President Biden.

Do these fluctuate because of some great magic wand that any of them swing or some sweeping policy move? Nope. Housing prices rise because there isn’t enough supply, which has a downward impact on rental vacancies. Notice how when President Bush had the giant drop off in housing starts, the subsequent years under Obama had inversely falling vacancies as the lack of new housing started to catch up.

So, what all of these stats show me is that housing prices are driven by the number of homes being constructed, which has a direct impact on rental vacancy rates, but hardly move the needle on homeownership rates in general. To the experienced, that was all perfectly obvious, but I’m setting the record straight: This is the fundamental story of the American housing market over the last 30 years. 

The Federal Reserve’s Role

While the supply and demand fundamentals I laid out above are what primarily drive the long-term trends of the housing market, the short-term trends are largely defined by the Federal Reserve, which is where things can get very murky.

I’ve seen some takes recently suggesting that the Federal Reserve is controlled by the president, that it’s actually happening right now, hence the potential September rate cut before an election, and that the Fed is really just one tool the president has at its disposal to control the economy.

First and foremost, the primary goals of the Federal Reserve are called the “dual mandate.” It’s to maximize employment and keep prices stable. That means that the Federal Reserve will influence the U.S. economy by raising or lowering the federal funds rate, the benchmark interest rate that banks use to lend to one another.

Since banks also happen to lend mortgages, the federal funds rate has a huge impact on mortgage rates. In times when inflation is high, the Federal Reserve raises interest rates in order to cool down the economy and stifle demand. When the economy needs a boost, rates will be cut in order to stimulate demand and move money. In either of these situations, mortgage rates will move one way or another, and the housing market will almost certainly be impacted. Here’s what rates looked like under each president.

Now, if you’re the President of the United States and, say, running for reelection, then you want the economy to be good. A good economy usually features low interest rates, low inflation, high consumer spending, and overall good vibes.

This is where the contention lies, and why some would suggest the Fed is actually an extension of the White House. 

It’s not always good vibes, and the Federal Reserve, on paper, acts as an independent government entity, meaning that the president “effectively” has no control or say over what the Fed does. Once again, another key housing factor (mortgage rates) that the president basically has nothing to do with—on paper.

I emphasize “effectively,” however, because the president does have the power to nominate the individual who will act as Federal Reserve Chairman, so long as the Senate confirms them. For example, while Donald Trump has railed against current Fed Chair Jerome Powell, he was the one who nominated him in the first place.

With that in mind, in some sense, the president does have the ability to influence policymaking at the monetary level because they get to pick who serves. If we use basic logic, we can deduce that it’s not at all unlikely that a president, in private or with a gigantic megaphone in front of millions of people, might place significant personal pressure on an incumbent Fed chair, such as what Trump, who is running for reelection and could replace Jerome Powell as soon as 2026, is doing as we speak.

I won’t speculate on personal dealings in the upper echelons of power. I certainly hope no one in our government is scheming against one another for personal gain and playing with the most powerful economy in the world to do so.

But I’m also not naive.

The “Real” Power of the President

President Theodore Roosevelt coined the term “bully pulpit” as a way to describe his office. Bully pulpit is a rough rider’s way of saying, “I have the biggest blowhorn in the world, and even if you don’t want to hear what I have to say, you will.”

There is no person on the planet with a larger platform than the President of the United States. What they say is written in history books, replayed millions of times over on YouTube, and researched and analyzed for generations. 

When we look at the president from a constitutional standpoint, their powers are actually fairly limited. The president was never designed to be an executive powerhouse. Only a meer head of state to sign off on bills passed by Congress, appoint judges, and deal with national security. Through the last 235 years since the Constituition’s ratification, of course, the executive branch has slowly asserted extra powers and bloated itself with a massive bureaucracy. This is where the “real” power comes from.

We can trace the origins of a president’s modern-day impact on housing from a pure policy perspective to President Franklin D. Roosevelt’s establishment of the Federal Housing Administration (FHA) in 1934. The FHA was born out of the Great Depression and a need to restructure the American banking system, which meant the FHA would begin insuring mortgage loans provided by private lenders. Today, we’re all acutely aware of how the FHA impacts real estate through its low downpayment programs, lower credit standards, and lower interest rates for mortgages.

A flurry of other agencies started after the FHA, including:

• Public Housing Administration: Established in 1937 to oversee public housing.
• Federal National Mortgage Association (Fannie Mae): Established in 1934 to create a secondary market for mortgages.
• Federal Home Loan Mortgage Corporation (Freddie Mac): Created in 1970 to expand the secondary mortgage market.

The Department of Housing and Urban Development (HUD) was established in 1965. The HUD was a project started by President Kennedy to consolidate all of the independent housing-related agencies operating under the executive branch, including Fannie Mae and the FHA, and make them a part of one department at the cabinet level.

With the HUD elevated to a cabinet-level position, every director (secretary, in this case) is directly appointed or fired by the president at his discretion. In turn, the HUD and its underlying agencies act as outgrowths of the president’s agenda, making them the most impactful drivers of “policy” that a president can put together.

But is “Policy” Enough?

I put policy in quotes because there are really two types of “policy.” The first is actual policy, which looks like the Fed lowering interest rates to stimulate the economy. That has a clear action, which leads to a clear outcome. 

Then there’s the second type of policy, which is literally just stuff. The best example happened last week when Kamala Harris said she was going to provide a $25,000 downpayment assistance program for first-time buyers. Downpayment assistance isn’t a new concept, but when your chief goal is to “reduce prices,” and you have a tremendous supply issue, making it easier to buy does not actually fix the problem. In fact, it probably makes it worse.

That, to me, is just saying stuff.

But, there are also cases where the “bully pulpit” of the president’s office is enough to set the course straight. In 1995, President Clinton’s “National Homeownership Strategy” laid out a set of problems in the housing market, specifically highlighting declining homeownership rates. It then outright suggested that the executive branch could not solve the problem alone (in a rare show of modesty), but with the help of private stakeholders, municipalities, and communities, they could increase the homeownership rate to a record high.

Of course, at a high level, Clinton directed Fannie Mae and Freddie Mac to make loan products more widely available, and to his credit, it worked. Going back to the homeownership rate graph earlier, Clinton saw rising rates throughout his term.

But, it also helped fuel the subprime mortgage crisis, and many of those same homeowners he attempted to help lost their homes to foreclosure, and the homeownership rate fell off a cliff.

Is this a prime example of interference in a free market when the president really shouldn’t? Maybe. Is it the president carelessly giving free rein to various actors (government agencies) that shouldn’t carry so much weight? Possibly. Is it just a man wanting to do good things for his country? I think it’s possible. 

But what it is—is policy. And even when policy is successful at one junction. The next junction might carry devastating consequences. 

Since the subprime mortgage crisis and the passage of the Dodd-Frank Act, presidents have scarcely pushed for policy that would change the fundamentals of housing. President Trump’s tax cuts in 2017 included 100% bonus depreciation rules, but it was certainly no game changer for the typical buyer.

Of course, President Biden has promoted housing policies, including the Housing Supply Action Plan, which is meant to provide funding to local governments that want to remove restrictive zoning laws and to identify areas for high-density development. There’s also Fannie Mae’s 5% down multifamily loan, which, as stated earlier, is an agency included in the president’s arsenal. 

We can’t measure the impacts of these policies yet, but the reality is that they don’t move the needle in the way we need them to. Does it make sense for the federal government to spend several billion dollars on incentives to build housing and offer downpayments with mixed results? Or would it be better to cut these extraneous funding programs and just focus on creating a better economic environment so that builders can build cheaply and people can get good jobs and buy homes?

That should be the question we’re all asking.

Final Thoughts

What I’ve found is that the president has a fairly limited impact on housing. When they want to make an impact, it’s done in the form of large-scale “policies” where they use the power of their platform to push agendas. These agendas have had varying consequences and cannot be squarely placed on any one individual to blame, as the president uses his executive powers to direct the various government agencies working below him to carry out these policies.

Meanwhile, the president has the power to nominate the chairman of the Federal Reserve, the key authority on U.S. monetary policy.

However, despite the levers a president can pull, the housing market’s fundamentals remain entirely dependent on supply and demand, and no amount of pork barrel political scheming can change that. We either have enough homes to meet demand, or we do not. 

As of right now, we do not.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.