How Today’s Real Estate Policy Environment is Impacting Investments in Housing

A year ago, Narrative examined how political attacks shaped the real estate industry's legislative and regulatory environment. Housing affordability had taken center stage before the 2024 presidential election, rising from a ubiquitous local issue to an increasingly politicized topic nationwide.

A shortage in supply long drove concerns in the housing market following the 2008 financial crisis, which was exacerbated when people moved out of cities during the COVID-19 pandemic to chase record-low mortgage rates. However, today’s housing market has shifted, and so have the risks for those doing business in the industry.

What’s Changed

• Supply is catching up – at least in some markets. For-sale inventory is returning to pre-pandemic levels across regional markets that boomed during the pandemic.

• Rents are moderating. Similar to the supply of single-family homes, previously high-demand markets that invested in building apartments are now seeing declines in multifamily rental rates. However, this hasn’t decreased scrutiny of corporate actors in the sector.

• Homeownership costs are increasing. Despite these changes, buyers are still on the sidelines as expenses associated with homeownership remain high. Mortgage rates have remained above 6% since 2022, and insurance premiums have risen 24% from January 2023 to January 2025 alone. These market realities are finally breaking through, as lawmakers in areas that experienced high demand, like Florida, focus on ways to lower homeownership costs.

What Predictions Came True

• The administration is formalizing housing as part of its policy agenda. Treasury Secretary Scott Bessent recently shared that President Donald Trump may soon declare a national housing emergency. This declaration could potentially lead to significant policy changes, such as standardizing local building and zoning codes, decreasing closing costs, and granting tariff exemptions for certain construction materials.

• States and localities continue to drive change. Look no further than scrutiny of rental prices to see how this dynamic has played out. In early 2024, a wave of lawsuits began against RealPage and major multifamily operators for allegedly inflating rents and undercutting competition via RealPage’s rent-setting algorithm. By March of this year, Minneapolis had become the fourth U.S. city to ban software that compiles data and utilizes an algorithm to recommend rental prices. In August, Greystar, the largest apartment owner in the U.S., reached an agreement with the Trump administration’s Department of Justice to resolve a lawsuit started under the Biden administration on Greystar’s use of RealPage's software.

• A bipartisan focus on the issue continues. Across red and blue states, from Washington to Florida, lawmakers on both sides of the aisle are exploring limits on institutional ownership of housing and scrutinizing how rental prices are set. Democrats continue to lead on action geared toward lowering rent prices, while both parties have directed rhetoric and policy proposals at large institutional investors in housing.

What We’re Watching Now

• AI and algorithmic scrutiny. The backlash to algorithms determining rental rates may be just the tip of the iceberg. As the industry continues to embrace AI to improve operations, expect increased scrutiny of how it’s applied to manage one of the most sensitive parts of people's lives.

• New investment frontiers. Investors are increasingly looking to less traditional sectors like student housing, mobile home parks, and senior housing. Entries into these markets offer new opportunities, but not without added reputational risks.

• Partisan fighting in the 2026 midterms foreshadowing policy shifts. Housing will continue to be a key issue in the midterms, similar to or more intensely than in the 2024 presidential election run-up, especially under stressed economic conditions. This could portend shifts in housing policies and regulations, making it crucial for industry stakeholders to stay informed and prepared.

How The Industry Can Prepare

• Start with the ground game. The old saying goes that three things matter in real estate: location, location, location. The same is true for approaching your public affairs strategy in the industry – lead with a localized approach that considers the unique characteristics of each market. Real estate is local, and so are your most immediate threats.

• Balance defense with proactive engagement. The current political and media environment is primed to oppose additional private investment in housing. Interested parties must perform due diligence to understand risk exposure and have a reactive strategy ready while planning to build relationships with stakeholders proactively. This could involve engaging with local community leaders, partnering with advocacy organizations, and participating in state and select public forums. This will allow you to accurately frame your operations and impact before it’s decided for you.

• Identify openings to shape the narrative. Leaders in Republican leaning states are turning their attention to other challenges in the housing market, creating an opening to reset the conversation. While there’s a bipartisan focus on the impact of housing costs on constituents, opportunities can still be identified to tailor messaging to lawmakers on both sides of the aisle.