Building Project 2025: The HUD

In the midst of a crisis of homelessness and housing affordability, one department has the power to change the face of housing forever.

On November 5th, U.S. voters used their rights to give Donald Trump a deafening victory to serve a second term as the 47th President of the United States. Leading up to the election, there’s been a lot of coverage about Project 2025, the initiative lead by the conservative think tank The Heritage Foundation that provides a blueprint for a conservative overhaul of the U.S. government.

While Donald Trump denies being involved in Project 2025, the plan is closer to reality with him than without. In this post, we take a closer look at Chapter 15 on the Department of Housing and Urban Development (HUD). Read until the end for a preview of the recently announced next Secretary of HUD.

Who is the HUD and What Do They Do?

The Department of Housing and Urban Development is a federal agency that runs national policies and programs to address American housing in a few key ways:

• Affordable Housing through the Public Housing Program, providing housing for approximately 970,000 households.

• Community Development through programs like the Community Development Block Grant, giving annual grants to states, cities, and counties to support housing rehabilitation, public facilities, infrastructure improvements, economic development, and social services.

• Housing Assistance in the form of programs such as Section 8, 202, and 811 which provide rental assistance to low-income families, the elderly, and individuals with disabilities.

• Provide Capital and Incentives for housing development through interest free advances, grants, and development tax credits to promote the development of affordable and accessible housing.

• Ensuring Fair Housing by investigating and enforcing the Fair Housing Act, which prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability.

The 2024 HUD budget is 73.3 billion dollars, or around 1% of the U.S. federal budget. The majority of the budget ($57.9 b) goes into rental assistance programs serving 4.8 million families, about 3% of total US households. However, this only serves 1 in 4 families in need.

HUD Under Project 2025

Chapter 15 of Project 2025 is authored by Ben Carson, who served as the Secretary of HUD from 2017-2021. He’s known for his candidacy in the 2016 Republican primaries (which Trump won, going on to become President), being the youngest chief of pediatric neurosurgery in the US (at the time), leading a team of surgeons in the first known separation of conjoined twins at the back of the head, and almost dying of COVID-19 by treating himself with homeopathic oleander extract under the expert recommendation of the controversial founder of pillow company MyPillow.

Ben Carson’s Project 2025 HUD blueprint has three major goals:

1. Reset HUD and reverse the Biden Administration’s implementation of progressive ideologies across HUD programs.

2. Redelegation of authority from career positions to politically appointed positions.

3. Reverse HUD’s mission creep and transfer department functions to other agencies, states, and localities.

The chapter, like most of project 2025, is sparse on implementation details, but the chapter does advise on some broad first year and longer term changes.

Change Career Leadership to Political Leadership

One of the main goals of Project 2025 is to change career positions to political non-career positions. Chapter 15 likewise advises the reassignment of HUD career leadership positions into political positions. This in theory would make the HUD more aligned to the administration’s political goals to more easily carry out their plans.

Combat Foreign Investment

The plan calls for the President to use an executive order to make the HUD Secretary a member of the Committee on Foreign Investment in the US. One stated goal is to address foreign threats (especially from China) in rental and ownership markets of single and multi-family housing. According to the National Association of Realtors, foreign buyer residential purchases accounted for $42 Billion during April 2023-March 2023, representing 2% of the $2.1 trillion volume. In addition, foreign buyers pay a higher median price than US buyers ($475,000 to $392,600), are more likely to pay all-cash (50% to 28%), and purchase a vacation or rental home (non-primary residence, 45% to 16%). At 2%, it’s unclear how big of a threat this is and how big of an impact it makes on the affordability crisis.

Reverse Biden Era Policies

Home ownership is a key component of the American dream. It’s also the key way for individuals to build wealth. Homes are usually the biggest purchase in a person’s life, and rent or mortgage one’s biggest expense. PAVE (Property Appraisal and Valuation Equity) is a policy under President Biden that aims to reduce the impact unfair appraisals on certain communities’ ability to build wealth. Appraisal is the process through which a home’s value is determined. If the appraisal process results in a consistent undervaluation of the home’s true worth, it has compounding effects on not only the homeowner, but the home values of the entire community. PAVE brings together a 15 agency task force to enforce the Fair Housing Act of which was already amended in 1988 to explicitly include appraisals. Chapter 15 calls for the elimination of PAVE, stating that it “threaten[s] to undermine the integrity of real estate appraisals“. PAVE was established in 2021. Its effects need a longer timespan to understand. It’s difficult to assess today the effect the policy reduction will have other than a reduction on agency spending.

The Biden administration is also known for passing a quite a few climate change initiatives, many of which address the climate impacts of construction and building operations. Project 2025 seeks to repeal these climate initiatives, which it claims adds as much as 40% to the cost of new housing construction. This elimination could increase housing affordability at the expense of our environment.

The Affirmatively Furthering Fair Housing (AFFH) regulation was reinstituted under President Biden. The plan seeks to repeal AFFH and any other uses of special purpose credit authorities. The AFFH requires HUD program participants to take proactive steps to eliminate housing discrimination. It promotes the use of special purpose credit programs which are design to meet the financing needs of underserved populations. By repealing this regulation, it reduces compliance overhead for local programs. However, by eliminating special purpose credit programs, it could reduce the overall effectiveness of local programs as well.

Another Biden initiative on the chopping block is the Housing Supply Fund, a $35 billion dollar program to increase the supply of affordable housing. The initiative provides $25 billion in grants to state and local housing finance agencies to support housing development and $10 billion in grants to remove barriers to affordable housing development. The program helps developers who want to build affordable housing by making it more financially feasible as well as easier to secure financing. By eliminating this policy, it could make it harder for developers to build affordable housing.

Prohibit Noncitizens from Living in Federally Assisted Housing

Trump is well known for his “America First” stance. Chapter 15 calls for a recommencement of the previous Trump era policy of prohibiting noncitizens from living in federally assisted housing. The goal is to carve out more supply for American citizens in need. The plan states that “Local welfare organizations, not the federal government, should step up to provide welfare for the housing of noncitizens.” This proposal is well in line with President Trump’s stated goals.

Encourage Household Self Sufficiency by Increasing Eligibility Requirements and Establishing Term Limits

A point of view the plan takes is that there are implicit biases against house-hold self sufficiency because of the current eligibility requirements and lack of limits in HUD assistance programs. It proposes setting term limits for Program Based (tied to the property) and Tenant Based (tied to the individual) Rental Assistance programs, aimed at reducing the implicit penalty to income growth (because higher income disqualifies individuals from assistance programs). Along with reforms in rent payment and escrow savings, the goal is to encourage recipients to become self sufficient at the term limit.

The plan also seeks to eliminate Housing First policies. Housing first policies take the position that to address homelessness, we should provide permanent housing as quickly as possible without preconditions. The idea is that stable housing is the foundational requirement to address other issues such as employment, health, and substance abuse. Project 2025 states that Housing First is a “Far Left” idea and fails to “acknowledge that resolving the issue of homelessness is often a matter of resolving mental health and substance abuse challenges.” Like many of the proposals in the plan, this represents a difference in perspective between the two parties.

A longer term goal is to evolve the HUD rental assistance away from public housing model towards choice vouchers to increase competition for renters while encouraging self-sufficiency for all non-elderly able-bodied adults.

Increase Mortgage Insurance Premiums for Mortgage Products Above 20 Years

Surprisingly, this proposal is not a wholesale repeal of the Biden-Harris reduction in MIP (Mortgage Insurance Premium). It seeks to increase the premium in 20+ year term products to encourage the use of shorter duration mortgages, which the plan believes better encourages wealth-building homeownership opportunities.

Prioritize Support for the Single Family Home

Multi-family housing is often cited as the preferred solution to the ongoing US housing crisis. The “missing middle” medium density developments which are difficult to build due to zoning regulations and community pushback, would add housing where it’s needed the most, in urban areas.

Project 2025 proposes that “Congress should prioritize any and all legislative support for the single family home.” It calls on the conservative image of the American dream home, a detached single family house with immaculate lawns. It opposes efforts to weaken single family zoning and places the burden of final say in zoning reform on local governments. It also encourages Congress to proposal tax credits for the renovation of housing stock in rural areas.

HUD Under Project 2025, Probably

If we assume Project 2025 is the plan for the next four years of Trumps second term (which the Harris campaign spent significant effort warning us against), what changes should we expect as the probable outcome?

1. Cuts to HUD spending. Many of the proposals involve elimination, reduction, or revision of current HUD programs. It aligns with the conservative perspective of deregulation and stops many Biden era initiatives before we are likely to see their effects.

2. Cuts in recent tailwinds for for re-zoning and multi-family affordable housing. By prioritizing single family housing and putting power in the hands of localities, the plan would be a significant setback to recent victories by YIMBYs and progressive housing advocates to leverage federal regulation to encourage multi-family affordable housing construction.

3. Cuts in climate change and regulatory compliance. Construction is one of the biggest contributors to climate change, but a lack of construction is the biggest contributor to the housing crisis. Instead of encouraging construction through government programs, the plan seeks to do so by eliminating barriers.

Overall, Chapter 15 represents a wide difference in perspective between the two political poles on what the American dream looks like. The conservative vision is one that’s American first (and only), single family, and self sufficient, with low intervention from the federal government.

The New HUD Secretary in The Huddle - Scott Turner

President elect Trump has already announced his pick for HUD Secretary. Scott Turner is an ex-NFL corner back who served as a Texas state representative from 2013-2017 and served previously as the Executive Director of the White House Opportunity and Revitalization Council. Last year, Turner was named the Chief Visionary Officer of JPI, a national developer of multi-family assets across the US. He is also the founder of the Community Engagement & Opportunity Council, which supports children living in poverty.

While not a neurosurgeon, Scott Turner does have some experience in community engagement and housing development. As he is newly nominated, we know little about his plan for HUD. What we do know is that the US housing, affordability, and homelessness issues aren’t going away anytime soon. While Project 2025 provides a perspective on a probable future, we will just have to wait an see.