'Trump Homes' set to make housing affordable for Americans — even you can get keys to one
The US housing market has been in crisis for several months now as potential home buyers are being blocked due to skyrocketing prices. President Donald Trump has promised relief for such people in the coming days, and it looks like one of the ways in which he plans to do so is called ‘Trump Homes.’ The plan might not be actively discussed at the moment, but it seems to have the support of builders.
As per a Newsweek report, Trump Homes would allow entry-level homes to be sold via a pathway-to-ownership program funded fully by private investors. What this means is that entry-level homes would be sold to these private investors, who would then rent out the property to home buyers. The money collected in the first three years would serve as the down payment. In theory, the plan sounds great, but some people have their concerns.
The Trump Homes idea has emerged from Lennar Corp and Taylor Morrison Home Corp, and as per the report, builders are fully behind it since they believe that the idea could be approved for as many as 1 million homes, providing more than $250 billion worth of housing. “The concept being floated by some builders is entry-level homes being sold to private investors who would in turn offer the properties purchased for rent,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, said.
“Renters would have the option after three years to purchase the home they're currently living in and apply prior payments to the down payment on the property,” he added. The CEO of Lennar believes that they are in a good place to offer affordable housing to buyers when the demand for houses goes up, and buyers are not restricted due to unaffordable costs.
“We’re very well positioned to provide the affordable supply that the market needs when demand is ultimately activated by either lower interest rates or government-sponsored programs to enable affordability,” he said. At the moment, the median home sale price is set at roughly $428,000.
However, the plan has its critics as well, who believe that these investors would basically have the same power as landlords today, who have jacked up the prices of their properties. “I don’t see this gaining much traction, if any, because it effectively expands the role of investors as landlords, which is already happening today. Long-term, this could do more harm than good for many Americans. Investors are profit-driven, and those costs rarely disappear, and they are typically passed through in higher rents or purchase prices. While it may create an entry point for buyers who lack a significant down payment, I struggle to see how this model improves affordability or housing stability over time," Kevin Thompson, the CEO of 9i Capital Group, said.
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