Mortgage expert doubts Trump's home affordability plan will have a big impact

Expert casts doubts over Trump housing plan

President Donald Trump has announced a step to tackle the issue of housing affordability. He said he wants to ban large investment groups from buying up single-family homes, but some are not convinced the plan will work as envisioned. FOX 10's Brian Webb reports.

PHOENIX - Buying a home remains difficult for many Americans, but President Donald Trump has announced steps to tackle the issue.

The backstory:

According to the Associated Press, the President said he wants to block large institutional investors from buying houses, saying that a ban would make it easier for younger families to buy their first homes.

"People live in homes, not corporations," Trump said in a social media post as he called on Congress to codify his ban.

The AP report states that Trump, who has been under pressure to address voters’ concerns about affordability ahead of November midterm elections, is tapping into long-standing fears that corporate ownership of homes has pushed out traditional buyers, forcing more people to rent.

The same article, however, also states that Trump's plan does little to address the overarching challenges for the housing market: a national shortage of home construction and prices that have climbed faster than incomes.

Local perspective:

In the Phoenix area, tens of thousands of homes are owned by investors, ranging from large corporations to "mom and pop" investors. While currently legal and often considered good business, the practice has raised questions about its impact on the market.

Kelsey and Ben Knutsen are among the few who have recently secured their version of the American dream, buying a home in the Willow District.

"I think it’s more important to be really happy and love where you are," Kelsey said. "If you’re happy where you are, then that's the important thing."

However, many would-be homebuyers can’t afford that dream. Some studies suggest private investors can drive up home prices by 20% to 30%.

The other side:

Jeremy Schachter, a mortgage broker in Central Phoenix with 25 years of experience, is skeptical about the proposed ban.

"It’s not going to have a big impact at all," Schachter said. "Only a small percentage, roughly about 2% of overall rental properties in America, are owned by major corporations."

Schachter suggests other factors might help more, such as higher wages and lower interest rates. He pointed to specific fees from Fannie Mae and Freddie Mac that affect rates based on credit risk and occupancy. "If you limit those or eliminate those, interest rates will dramatically drop," he said.

Senators weigh in on Trump's proposal

The proposal has also been met with mixed reactions in the U.S. Senate.

"These institutional investors can find other places that can get a good [Return On Investment] without having to compete with ordinary, average Americans trying to buy their first home for their families," said Sen. Steve Daines (R-Montana).

Conversely, Sen. Elizabeth Warren of Massachusetts argued the measure doesn't go far enough and criticized the administration's broader record.

"In the time that Donald Trump has been president, foreclosures have spiked by 21%," Sen. Warren said. "The administration just approved the merger of two of the biggest real estate outfits in this country, which will further drive up costs of buying and selling homes."