Donald Trump Executive Order on Affordable Housing

[Art Perkitny]

Read this the other day regarding Donald Trumps recent executive order on examining the affects of regulatory barriers at the Federal, State, local levels on the availability and development of affordable housing. 

https://www.whitehouse.gov/presidential-actions/executive-order-establishing-white-house-council-eliminating-regulatory-barriers-affordable-housing/

The order states that the council endeavors to encourage State, local, and tribal governments to reduce regulatory barriers to the development of affordable housing.

Which in turn, aims to increase the supply of affordable housing.

I asked myself what effect will the have on the REI space and my first thought was that the increase in supply will cause rent and values to slow down or possibly even stagnate all together.

Then I considered the question, is affordable housing even really affordable without government subsidies?

To say, will reducing regulatory overhead really drive down the cost of new construction so much that private owners will be able to make adequate returns while charging affordable rents?

The White House states that more than 25 percent of the cost of a new home is directly related to federal, state and local regulations and up to 42 percent for some new multifamily constrictions.

If the above is factual, then the a dramatic increase in low priced rentals should occur and drive supply up. If demand is met or exceeded, then this policy could have the potential to increase vacancies, lower rents and reduce property valuations for lower end real estate. 

if not, then the policy (if abused), may only serve to speed up the development of high-end rentals and consequential leave the low to mid end market largely unscathed. 

Curious what other BP members think about this?