The Housing Affordability Crisis Takes Center Stage in High-Stakes Midterm Elections

As political parties jockey for control of Congress in an increasingly tight and fiercely contested midterm race, both Democrats and Republicans have placed housing affordability at the very center of their legislative agendas. With the balance of power on the line, lawmakers are keenly aware that the cost of shelter has become one of the most pressing domestic concerns for everyday Americans.

Throughout the year, both major parties have amplified messaging centered on housing costs, responding to an economic environment where American homeowners are being hammered with higher insurance premiums and climbing property tax rates. At the same time, persistently elevated interest rates have effectively frozen large segments of the housing market, locking many existing homeowners into low rates while pricing out prospective buyers. Perhaps most critically, younger generations, including Gen Z, have expressed overwhelming anxiety regarding whether they will ever be able to achieve the milestone of homeownership. In many closely contested congressional districts, the ultimate control of Capitol Hill could very well hinge on how voters perceive each party’s ability to address these profound economic frustrations.

Beyond campaign rhetoric, Washington faces the immediate challenge of implementing and overseeing laws that Congress has already enacted. The bipartisan 21st Century Road to Housing Act promises sweeping reforms through dozens of specific provisions aimed at cutting bureaucratic red tape and encouraging the construction of new housing stock across the nation. Over the next two years, Congress will be tasked with overseeing the careful rollout of these newly established programs while simultaneously navigating policy cooperation with the final two years of the Trump administration. Meanwhile, the broader real estate market will be looking directly to Washington for regulatory clarity and stability.

Jeff Holzmann, chief operating officer of Dallas-based real estate investment firm RREAF, notes that the real estate industry desperately needs clear rules to successfully make long-term capital allocation and investment decisions. Broad regulatory initiatives, such as the newly introduced federal ban on institutional investors participating in the single-family housing market, require precise definitions and clear guidelines. Without them, Holzmann warns, these policies risk failing to achieve the broader affordability goals intended by Congress when it passed the legislation.

"From my operator’s perspective, the bigger question is whether these regulations will continue to encourage private capital to invest in building new homes and improving existing ones, as that’s what drives our business," Holzmann says. "If that pans out, I believe it can make a real difference in affordability over time."

What Republicans Want

Over the course of the legislative year, Republican lawmakers have consistently argued that meaningful solutions require structural reforms to the broader housing finance system. According to the GOP, existing regulatory frameworks have inadvertently discouraged traditional commercial banks and institutional financial institutions from infusing necessary capital into the residential housing market.

House Financial Services Committee Chair Rep. French Hill of Arkansas addressed the U.S. Chamber of Commerce in September, outlining his party’s desire to see targeted reforms to the Basel III regulatory framework. Hill argued that such changes are essential to encourage a larger number of traditional commercial banks to actively finance residential mortgages and construction loans.

"That should take steps to encourage the large banks to participate in the secondary market for housing," Hill said during his remarks. "I think Dodd-Frank went too far on this point. Essentially, by the capital standards for a construction loan, pushed a lot of the biggest banks out of that business. It also limited mortgage servicing rights by the large financial institutions. Both of those things, at the margin, raise the cost of liquidity for housing."

Further detailing the Republican legislative agenda, Rep. Mike Flood of Nebraska, who serves as the chairman of the House Housing and Insurance Subcommittee, stated in July that he wants to see single-family homebuilding explicitly exempted from the prevailing wage mandates enforced by the Davis-Bacon and Related Acts. Flood and Hill have also argued that homebuilding materials should be exempted from the sourcing and domestic content mandates found in the Build America Buy America Act, which they contend imposes costly administrative burdens and drives up raw material expenses for developers.

Concurrently, congressional Republicans have strongly supported the Trump administration’s ongoing efforts to shift the focus of the U.S. Department of Housing and Urban Development away from traditional "housing first" homelessness programs. HUD leadership, including Secretary Scott Turner, has sharply criticized what they describe as a "homeless industrial complex," opting instead to direct federal funding toward programs that place a primary emphasis on addiction treatment, behavioral healthcare, and personal recovery services. However, this strategic shift has triggered intense political friction, resulting in lawsuits from various states and service providers, even as HUD continues to navigate separate regulatory and enforcement actions.

What Democrats Want

In contrast to the Republican focus on deregulation and financial system overhauls, Democratic lawmakers have consistently called for expanded federal spending and targeted interventions designed to bolster tenant protections, homeowner assistance programs, and affordable housing development.

Earlier this year, Senate Minority Leader Chuck Schumer of New York announced that Senate Democrats would aggressively pursue legislation aimed at cracking down on hidden junk fees, predatory corporate landlords, and abusive housing practices, including the use of algorithmic price-fixing tools by corporate property managers.

A series of Democratic-led bills introduced throughout the year have also called for significantly expanded federal funding for Section 8 housing vouchers, localized emergency rent relief programs, eviction prevention initiatives, and the expansion of the Low-Income Housing Tax Credit. The federal tax credit program is widely regarded as one of the most effective tools for generating new affordable housing units, currently producing between 40,000 and 50,000 subsidized units annually.

Rep. Emanuel Cleaver of Missouri, the ranking member of the House Banking subcommittee, emphasized the absolute necessity of effective bipartisan compromise during his address to the U.S. Chamber of Commerce in September, noting that the legislative branch must find ways to bridge ideological divides.

"We’re woefully lacking in legislation that can move through both the House and the Senate and get to the president’s desk," Cleaver told the audience.

Democrats are also expected to renew legislative efforts aimed at implementing stricter federal oversight and regulation of energy-intensive data centers. Earlier battles saw Democrats successfully sink a Republican-led bill that would have encouraged electric utilities to shield everyday ratepayers from the skyrocketing energy costs associated with expanding data infrastructure. Instead, Democrats favored alternative legislative proposals that would grant the Federal Energy Regulatory Commission much more stringent enforcement and regulatory powers.

At the state and local levels, the Democratic party must also navigate the political dynamics of a growing wave of Democratic Socialist candidates winning elections. These officials have introduced varying degrees of support for progressive housing policies, including universal rent control measures and expansive municipal commitments to public housing development.

What’s Bipartisan?

Despite deep ideological polarization on many fiscal and social issues, lawmakers from both sides of the aisle have managed to find areas of common ground. The 43-member bipartisan Build America Caucus recently released a comprehensive 95-page legislative primer outlining policy objectives that members intend to pursue regardless of which political party holds congressional majorities in the upcoming term.

The caucus’s shared housing agenda prioritizes fast-tracking residential construction in municipalities burdened by outdated and restrictive zoning laws. It also promotes incentives for Transit-Oriented Development—housing built in close proximity to public transportation hubs—as well as the utilization of under-utilized federal lands for residential development, alongside the modernization of outdated national building codes.

"The problem isn’t a lack of good ideas; it’s the bureaucratic red tape slowing projects down for years," Rep. Sharice Davids of Kansas said in a joint statement accompanying the caucus’s policy primer.

Furthermore, members of both parties have rallied around specific legislative vehicles designed to boost housing inventory. For instance, the More Homes on the Market Act—legislation that proposes doubling the capital gains tax exclusion for homeowners selling their primary residences—has successfully attracted more than 170 bipartisan co-sponsors across both the House and the Senate. While Democrats and Republicans have occasionally pitched differing structural adjustments to the capital gains tax framework, the widespread support underscores a shared recognition of the need to unlock housing supply.

Lawmakers have also frequently collaborated on bills intended to foster architectural innovation and expedite construction processes. In a recent example, Reps. Maggie Goodlander of New Hampshire and Jefferson Shreve of Indiana introduced a bipartisan bill designed to encourage pre-reviewed, permit-ready home designs. The sponsors noted in a joint statement that standardized, pre-approved architectural blueprints could dramatically reduce municipal approval timelines and lower administrative hurdles for residential developers.

"I’m working with Republicans and Democrats to clear away every rule that makes it slower and more expensive to build a home in New Hampshire," Goodlander said.