What the 2024 Presidential Election Means for Multifamily

The presidential election is looming and—as in 2016 and 2020—it’s a tight race between two candidates with vastly different visions for the country. One of the main areas of difference is the housing policies proposed by Vice President Kamala Harris and former President Donald Trump.

Every presidential election has had an impact on housing policy, and it has always been something the candidates talk about. But this time feels different, according to Greg Brown, National Apartment Association senior vice president of government affairs. Housing is in crisis, and the heat is on.

“I’ve been working on housing policy in some shape or form since 1998, and I cannot remember a time when rental housing was a center point for conversation by both presidential candidates, and many Congressional candidates,” Brown said.

Regardless of the outcome of the presidential election, Brown expects many new members of Congress, and thus a big job for the multifamily industry will be educating them on the industry’s needs, .

Harris on housing

Both campaigns acknowledge the U.S. housing crisis, and say they understand the importance of supply in resolving it, said Cindy Chetti, senior vice president of Government Affairs for the National Multifamily Housing Council.

Harris has promised that her administration will work with developers and builders to construct “3 million new homes and rentals” by the end of her first term in 2029. This would be accomplished via a combination of tax incentives and a $40 billion fund, though the ratio of single-family and multifamily in that 3 million total isn’t clear.

Harris has also proposed ending zoning restrictions and other barriers on multifamily. But, since zoning is typically a local matter, it’s not clear how the federal government would do that.

In the affordable housing sector, the expansion of the Low-Income Tax Credit didn’t pass Congress this year, but the housing industry will continue to push for it, Chetti said. So would a Harris administration. according to the candidate.

Harris is also proposing restricting the use of algorithms to set rental prices and cracking down on corporations buying single-family homes to rent them. She has endorsed some aspects of rent control, though not specifically the Biden administration’s recent proposal to limit rent increases to 5 percent over the next two years for owners of more than 50 residential units—an idea that is unlikely to succeed in a divided Congress.

She would expand rental assistance for veterans and other low-income renters, and provide $25,000 down payment assistance to first-time homebuyers

Trump on housing

Trump has said little about rent control during the campaign, but there is little doubt that, as a landlord himself, he is against it.

“Rent control is a failed policy,” Chetti said, echoing the general feeling among the multifamily industry. “It is not one that is going to help us or add one unit to the supply.”

As for new housing production, Trump has not mentioned a specific figure, but he has proposed opening up federal land for housing construction and reducing costly regulation. He is also pledging to work with local governments to streamline the permitting and review process, though he has also strongly criticized efforts to do away with single-family zoning as attacks on the suburbs. He has indicated he may create a parallel Opportunity Zone program for housing. And he would urge the Federal Reserve to reduce mortgage rates.

The fate of the 2017 Tax Cut

Because of a matter of timing, tax policy is now front and center in this election, according to industry experts. Key provisions of the Tax Cuts and Jobs Act of 2017 are slated to expire in 2025. Harris is looking to overhaul the law completely. Trump is looking to reinforce a measure he considers an important policy victory.

One big-picture consideration that impacts multifamily (along with a lot of other businesses) is what will happen to individual and business tax rates. In general, a Democratic administration would likely push for higher rates, especially for businesses and high-income individuals, while a Republican administration would either push to maintain the 2017 cuts or cut even more.

“The election outcomes are going to be most impactful on taxes because everyone agrees that tax policy is going to be addressed next year,” said David McCarthy, managing director, head of legislative affairs at CREFC.

Harris has proposed increasing the corporate tax rate from 21 percent to 28 percent, and increasing capital gains rate to 28 percent for those making $1 million or more. She would also tax carried interest as ordinary income, and limit like-kind exchanges to $500,000 in gain.

Trump is also targeting taxes. He would cut the corporate tax rate from 21 percent to a range of 15 percent to 20 percent, He would make the 2017 TCJA individual income tax cuts and the TCJA estate tax cuts permanent. He has floated replacing personal income taxes with increased tariffs.

Deeper in the weeds is the matter of the 20 percent tax deduction created by the 2017 law for pass-through income for such businesses as sole proprietorships, partnerships, limited liability companies, S corporations, and limited liability partnerships. It was a way for Congress to give these smaller businesses a cut comparable to the drop in rates for larger C-corporations. But unlike those cuts, the deduction is slated to expire at the end of 2025.

“Real estate overwhelmingly is structured as pass-through partnerships,” Chetti told MHN. “So that’s a big issue for us.”

Again, it seems likely that a Democratic victory would let the deduction expire, while a Republican one might give new life to it, though the provision is arcane enough that the candidates haven’t seemed to address it directly.

The fate of carried interest may come up again after the election, notes McCarthy. For years it has been in the crosshairs for Democratic critics, but also some Republicans, but has had powerful friends that have ensured its survival.

“One possibility of abolishing it would be in a divided government, because there are critics of carried interest on both sides of the aisle, even in the populist movement in the Republican Party,” McCarthy said. “Even Trump in 2016 kind of endorsed rolling it back.”

Still, a fully Republican government probably wouldn’t change anything for carried interest as the party attempted to renew the Tax Cut and Jobs Act of 2017, while a divided government or a fully Democratic one might make the effort when it tried to reverse most of that law, McCarthy said.

Insurance, GSEs, 1031 Exchanges

The skyrocketing cost of insurance, both for homeowners and multifamily landlords, is an issue that might gain some traction in the election, though the candidates haven’t offered much guidance on what action they might take.

“The cost and the lack of availability of insurance is really an impediment to multifamily deals at a time when you know the market dynamics are already difficult,” said Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association.

“I think the Trump administration would take more of a laissez-faire approach and probably leave traditional insurance regulations to the state, and not try to lean in as much as a Harris administration might.”

Other housing-related issues have faded somewhat since the last two elections, according to the experts MHN spoke with, such as the status of Fannie Mae and Freddie Mac. During the Trump administration, there was talk of taking the GSEs out of conservatorship, and even a few steps in that direction. Under the Biden administration, there hasn’t even been much talk, and the issue doesn’t seem to resonate much for now.

“My feeling is that the status quo is going to remain the order of the day for the GSEs,” said Sairah Burki, managing director, head of regulatory affairs and sustainability at CREFC. “No one’s really asking for the agencies to exit right now, since everything seems to be pretty smooth.”

Another proposal that isn’t in the spotlight now, but which might return, is the status of 1031 exchanges, which is an important aspect of the multifamily investment market. 

The Biden administration has proposed a rollback of 1031 exchanges, but that policy hasn’t ever made its way through Congress. It isn’t clear whether a Harris administration would have any better luck on the matter. Back in 2017, legislators suggested that tax cuts would obviate the need for 1031s, but that idea didn’t ultimately make it into the tax cut bill that year.

“In a scenario where you have Democrats taking full control of the federal government, which I don’t think is that likely, 1031s could be on the chopping block,” CREFC’s McCarthy said.

Read the October 2024 issue of MHN.