On Labor Day, Treasury Secretary Scott Bessent told The Washington Examiner, "We may declare a national housing emergency in the fall. We’re trying to figure out what we can do, and we don’t want to step into the business of states, counties, and municipal governments. I think everything is on the table."
Bessent was talking about "the housing affordability crisis that has left millions struggling to pay rent and priced out of homeownership," according to the National Association of Realtors® (NAR).
What Happens When a President Declares a National Emergency?
The 1976 National Emergencies Act gives presidents wide powers to declare emergencies at their discretion.
"Declaring a national emergency allows the President to bypass Congress to take a range of actions limited to the 137 emergency powers defined by law, as well as an additional 13 statutory powers if Congress declares a national emergency," explains Time magazine. "... Congress can terminate a national emergency by passing legislation, although the President can veto the resolution unless it reaches a supermajority. Otherwise, a national emergency can technically go on forever, so long as it is reaffirmed every year."
Courts may declare certain actions arising from national emergencies illegal. That's happened several times recently.
What Effects Might a National Housing Emergency Have?
So far, the administration has been vague about its plans, which it is still formulating. But it's easy to imagine some ways in which it might succeed in making homes more affordable:
- Reduce mortgage rates
- Remove tariffs on construction materials
- Lower closing costs
- Retain the construction labor force by stopping the deportation of its undocumented workers
- Deregulate many aspects of zoning and planning laws, allowing more densely populated (and affordable) developments
Another idea floated recently was to sell federal land for housing development. But that was soon shot down by the NAR, as we reported in July. "The vast majority of federally managed land, especially that overseen by the Bureau of Land Management, is located in sparsely populated areas like Alaska and the West, where housing markets are not overwhelmed with demand," said the NAR.
Why Progress Will Be Hard
Unfortunately, only one of those five bullet points is an easy win: lifting tariffs on materials, especially the 35% levied on Canadian lumber. That can happen at a stroke of the president's pen.
The president would dearly love to slash mortgage rates, but this may not be an option, even if he soon achieves a majority on the Federal Reserve's rate-setting committee. The investors who determine mortgage rates generally go along with Fed cuts to general interest rates. But they may not if they perceive cuts as politically motivated rather than economically justified.
There are ways to shave closing costs. But there's little evidence that mortgage lenders, title companies and insurers, appraisers or any of the others who contribute to those costs are price gouging. Absent a government subsidy or a risky deregulation of mortgage approval processes, it's hard to see where costs could be significantly cut.
Deporting undocumented immigrants is a central policy plank of the government. Is it politically realistic to start carving out exceptions for certain industries? Farmers and others might object if they don't get similar treatment to construction companies. And MAGA activists may see the whole thing as a slippery slope.
Adjusting zoning laws could make a worthwhile difference, allowing high-density developments around city centers. But Project 2025, which appears to be the administration's roadmap, rules that out. "It is essential that legislation provides states and localities maximal flexibility to pursue locally designed policies and minimize the likelihood of federal preemption of local land use and zoning decisions," it says on page 511. And Bessent's remark that "we don’t want to step into the business of states, counties, and municipal governments" suggests the federal government won't try to override local NIMBYism.
Fox 5 says, "Officials are considering tariff exemptions for some construction materials and lowering closing costs." It's unclear how much those measures would relieve the housing affordability crisis.
Still Hope
The government's acknowledgement of the housing crisis is positive in itself. Governing politicians recognize the problem and will seek ways to address it.
So far, we haven't identified many practical policies that are likely to make much difference. Hopefully the White House, Treasury and HUD have more tricks up their sleeve than we've thought up here.
