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How Would a New Democratic President Affect the U.S. Housing Market?

With email leaks showing that Democratic National Committee staffers criticized presidential contender Bernie Sanders, leading to the resignation of the party’s chair (we won’t even go into the Russian hacker allegations), U.S. politics seem like a soap opera right now.

But despite the scandal (and who doesn’t love a bit of juicy intrigue?), the Democrats did pass their 55-page party platform at their party’s convention in Philadelphia, outlining what they plan to accomplish if Hillary Clinton becomes the nation’s first female president. While the agenda was thin on specifics—much like its GOP counterpart—it did give us a sneak peek of what her election could mean for the U.S. housing market.

For starters, the Democratic agenda is pretty much the opposite of the Republican platform put out last week, which we also covered. Instead of getting rid of—or shrinking—the federal government’s role in the housing market, the Dems plan to amp it up instead. No big surprise there.

The party also plans to focus on the housing needs of minorities as well as the poorest and most vulnerable Americans.

“We will help those who are working toward a path of financial stability and will put sustainable homeownership into the reach of more families,” the platform reads. It later goes on, “Democrats believe that we should provide more federal resources to the people struggling most with unaffordable housing: low-income families, people with disabilities, veterans, and the elderly.”

Could rents go down?

A major thrust of the Democrats’ agenda is to create more affordable rental units by doing things like increasing the budget of the National Housing Trust Fund to build, preserve, and rehabilitate homes for the poorest Americans. The party hopes millions of new jobs will also be created as a result.

But creating these new rentals could drive down rents for everyone, if a flood of new and cheaper rental units hits the market, says Andrew Hanson, an economics professor at Marquette University in Milwaukee.

On the other hand, that could also result in lower homeownership rates across the country. That’s because renters may not see the point of buying if they’re not shelling out all that much for rent, he says.

The exceptions are the most expensive swaths of the country (we’re looking at you, San Francisco and New York!). In cities like these, lower rents could enable folks to stash a little more away for down payments.

More social services?

Another Clinton in the White House would mean more government-sponsored social services, the bane of fiscally conservative Republicans everywhere.

The Democratic plan includes “modernizing credit scoring,” which appears to be a euphemism for leveling the playing field for minority borrowers; “strengthening” the Fair Housing Act, which protects many Americans from housing discrimination based on factors such as race, religion, and disabilities; and providing more counseling for those seeking to get their finances in shape.

“These steps are especially important because over the next decade, most new households will be formed by families in communities of color, which typically have less generational wealth and fewer resources to put towards a down payment,” the Democratic platform states.

They also want to preserve the Consumer Financial Protection Bureau—which the Republicans want to eliminate or subject to congressional appropriation.

“Consumer protections are important,” says Alanna McCargo, co-director of the Housing Finance Policy Center at the Urban Institute, a Washington, DC–based, nonpartisan think tank. “There is a history in this country of predatory lending and other types of discrimination … that partially led to the housing crisis.”

The party also pledged to help more homeowners avoid foreclosure by beefing up programs such as the Neighborhood Stabilization Program, which funds the redevelopment of foreclosed, abandoned, and vacant properties. And the Democrats promised to “build on and expand” President Obama‘s initiatives to end homelessness for veterans and families.

And they vowed to protect members of the gay, lesbian, bisexual, and transgender communities from housing discrimination; ensure “adequate” housing for migrant workers; create more affordable housing for Native Americans on and off reservations; and provide housing assistance for autistic people transitioning into adulthood, according to the platform.

“They’re not necessarily going to bring on dramatic change, but they’re going to help those on the margins,” says Susan Wachter, a real estate professor at the Wharton School of the University of Pennsylvania. “This will help people move up to middle-class status and access homeownership.”

Is the Dodd-Frank Act making the housing crunch worse?

The Democrats vigorously defended the controversial Dodd-Frank Wall Street Reform and Consumer Protection Act, which was created to oversee the nation’s financial institutions after the subprime mortgage crisis plunged the world into a recession.

“We will stop dead in its tracks every Republican effort to weaken it,” the platform vowed.

But Dodd-Frank is making it harder for builders to develop the housing, including affordable homes, that the nation so sorely needs, says Jonathan Smoke, realtor.com®‘s chief economist. That’s because it makes it harder for local and regional banks to lend money to builders and developers.

“[The Democrats] say we need more construction,” Smoke says. “But they’re not open to realizing that Dodd-Frank has created some of the very problems they’re complaining about.”

He’d like to see them go a step further and set aside more money for low-income housing credits, which builders receive for putting up housing that’s below market rate.

Heavily regulated financial markets also make it harder for low-income, first-time buyers without the highest credit scores to receive loans or mortgages that fit their financial predicaments, says Christopher Palmer, a real estate professor at the University of California, Berkeley.

He also noted that the Democrats don’t plan to reduce the government’s exposure to the housing market through Fannie Mae and Freddie Mac, which purchase and guarantee loans. In sharp contrast, Republican nominee Donald Trump would do away with—or substantially gut—both Fannie and Freddie.

The bottom line

It’s impossible to know what another four years under a Democratic president would truly mean for the U.S. housing market, as the platform doesn’t exactly lay out, you know, specifics.

“There was a lot of general information on what they wanted to do, but not enough details on how they would accomplish it,” says the Urban Institute’s McCargo.

But what is clear is that the Democrats are “looking at ensuring that the most vulnerable populations, such as minorities, low- to medium-income borrowers, and first-time home buyers, have housing that matches their needs,” McCargo says.

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