Economist Paul Krugman says Trump 'telling the truth' on this issue

Economist Paul Krugman speaking in Rio De Janeiro, Brazil on September 25, 2023

According to Redfin, the "median sale price" of a home in Queens, New York is now $740,000 — which is particularly noteworthy given that Queens, where President Donald Trump grew up, generally has lower property values than Brooklyn or Manhattan. And average rents in Queens, according to Apartments.com, are $2910/month for a studio apartment and $3468/month for a one-bedroom apartment.

Meanwhile, is Des Moines, Iowa, Redfin lists $222,000 as the "median sale prices." And a studio apartment rents for $833 a month on average, according to Apartments.com.

The need for affordable housing is an issue that Trump is addressing, but according to liberal economist Paul Krugman, his ideas will only make the problem worse.

Krugman, in a column posted on his Substack page on September 3, explains, "Something strange may be about to happen. It looks as if Trump officials will soon declare that we face a national housing emergency — and they'll be telling the truth! We do, in fact, face such an emergency. Unfortunately, everything Trump is doing that affects housing availability will make the emergency worse."

The crisis, Krugman stresses, is real, but Trump's ideas offer no solution.

"We do, in fact, have a housing emergency," Krugman argues. "Over the past decade, home prices have risen much faster than the overall cost of living, so the popular perception that housing has become unaffordable is grounded in reality…. But take a look at Mandate for Leadership, the manifesto issued by the Heritage Foundation's Project 2025. "

Krugman continues, "It's all for deregulation when it comes to things like pollution controls. But when it comes to housing, it goes full NIMBY…. So no, the Trump administration won't do anything to expand housing supply, which is the only way to make housing more affordable. In fact, Trump's non-housing policies will discourage home construction. Nothing says 'make housing cheaper' like imposing a 35 percent tariff on imports of Canadian lumber and deporting many of the immigrant workers crucial to the U.S. construction industry."

According to Krugman, the "home price surge since 2015" in the United States "looks very different from the housing bubble of the 2000s."

"That bubble was largely driven by speculation, with house prices rising much faster than rents," Krugman explains. "The price surge also bypassed sunbelt cities like Atlanta, Houston and Dallas, where housing supply expanded to meet rising demand. This time, however, we're looking at a truly national phenomenon. As Edward Glaeser and Joseph Gyourko document in a recent paper, housing prices have risen rapidly, without eliciting a large increase in homebuilding, even in cities that avoided the 2000s bubble."

Paul Krugman's full Substack column is available at this link.