Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The Trump administration’s grand plan to fix America’s housing affordability crisis relies heavily on deregulation, and Wall Street is increasingly united in its skepticism that it will actually work.
In a new research note published Thursday, UBS analysts analyzed the Economic Report of the Presidentwhich outlined the administration’s most detailed housing strategy to date and found the US short almost 10 million houseshigher than UBS’s own estimate of approximately 7 million units. The verdict: well-intentioned, direct in places, but unlikely to provide the “adrenaline shot” the housing market needs heading into the midterms.
The administration’s central argument is government regulation — what the White House calls “bureaucrat tax” — is the main factor behind the country’s housing crisis, and that burden adds more than $100,000 to the cost of a single-family home. The administration estimates that a standard deviation decrease in the Wharton Residential Land Use Regulatory Index could increase the US housing stock by 13.2 million units.
To prove the concept was achievable, the White House pointed to Texas in the early 2000s, when tighter land-use rules and rapid suburban expansion enabled home prices to remain stable even as its population soared.
The problem is that the model eventually produces overheated prices — and a boom-bust cycle perpetuated in Texas. luckLance Lambert reported in 2022 with Austin being over 41% and Dallas at 33%. By 2026, the correction has arrived: Austin home values have fallen more than 11% from their 2022 peak and the city now ranks 51st out of 52 major US metros in housing market health, with Dallas falling by nearly 11% as well.
“While bubble house prices and negative demand shocks are key elements of boom-bust cycles, so is supply expansion,” Lambertcurrently the editor-in-chief of ResiClubSPOKE luck. “The fact that markets like Austin, Punta Gorda, and Tampa have more available land that can be built means they are more likely to see a supply response after overheating in home prices and rents.”
If demand increases in those markets, builders can quickly ramp up construction. But if demand cools, more supply coming online could increase downside pressure on prices and rents.
The flip side, Lambert said, is that supply-constrained markets like those in the Northeast or coastal California tend to see less dramatic boom-bust swings because of limited buildable land and low levels of new construction.
In Texas, therefore, the administration is essentially citing a success story that has become a cautionary tale — precisely the growth spurt that deregulation alone, without coordinated demand management, has historically failed to curb.
None of that means deregulation is the wrong long-term prescription. “There is no magic wand that will suddenly restore housing affordability to the historical average tomorrow,” Lambert said. “It takes time for the recent deterioration to heal, and some markets will see it faster than others. That said, in the long term, if we make it easierto build more markets, faster supply can respond to these cyclical spikes in housing demand – as we saw in 2020-2022 – and we will have a healthier housing market.
UBS analysts called the attempt to tackle housing from a supply and demand perspective “encouraging.” The proposed best practices organized around the release of manufacturing innovation, streamlining the stages of home construction, and protecting consumer choice also represent “a step in the right direction,” it added.
But the bank sees a fundamental structural problem: housing regulation in the United States is largely controlled by local governments, not Washington. That means the administration’s guidelines are, at best, voluntary proposals. That’s why states with the heaviest regulatory burdens, such as California and New England, lean Democratic and “may be less willing to comply” with the White House’s playbook.
This is not a new finding. In January, Morgan Stanley strategies Trump’s housing directives have been described as “modestly helpful for home ownership affordability,” warning that they amount to a marginal adjustment rather than a market remedy. The real obstacle, Morgan Stanley concluded, is the “lock-in” effect: almost two-thirds of all outstanding mortgages still carry interest rates below 5%, which means that homeowners have little financial incentive to sell no matter how much deregulation Washington continues. Torsten Slok of Apollo Global Management noted that 40% of US homes are unsecured, making the lock-in effect much deeper than the mortgage data suggests.
In the meantime, the housing market has been frozen for nearly three years, with the spring thaw that buyers continue to hope repeatedly fails to materialize.
If the White House wants to move the needle quickly, UBS points to an even easier lever: there is Fannie Mae and Freddie Mac increase purchases of mortgage-backed securities, or temporarily cut the guarantee fees charged by two government-backed business lenders. It’s the same mechanism the administration tried in January, briefly pushing the 30-year rate below 6% for the first time since 2022 before the effect wore off.
There is one area where UBS expresses real enthusiasm: off-site and modular construction. Construction worker productivity declined roughly 30% between 1970 and 2020 — a drag the administration estimates cost the U.S. economy about 20 basis points of GDP growth each year — while overall U.S. productivity increased 100% over the same period. UBS estimates that wall panelization alone can generate $6,200 per home in cost savings of scale, 30% fewer framing days, and 20% less waste.
The administration’s report recommends aligning building codes for modular and prefabricated housing with national standards, which UBS calls a potential factor in efficiency gains across the housing value chain.
However, off-site construction is a year-round construction, not a spring solution. Currently, the gap between the administration’s housing ambitions and available tools remains wide.
