Trump lays out his plans to make housing cheaper in Davos speech

• President Donald Trump addressed high housing costs and interest rates in his Davos speech.
• Trump said the goal of homeownership has fallen out of reach for millions of people under Biden.
• Trump didn't share new details on his housing plans, including using a 401(k) for a down payment.

After making his case to acquire Greenland, President Donald Trump celebrated his own achievements and elaborated on his plans to address the high cost of housing in the US during his hourlong speech at the World Economic Forum in Davos, Switzerland, on Wednesday.

"Homeownership has always been a symbol of health and vigor of American society, but that goal fell out of reach for millions and millions of people in the Biden era because interest rates went up so high," Trump said. "Today, I'm taking action to bring back this bedrock of the American dream."

The Trump administration's proposals have included banning "large institutional investors" from buying single-family homes, purchasing $200 billion of mortgage debt to reduce mortgage interest rates, introducing 50-year mortgages and portable home loans, and allowing homebuyers to use their 401(k)s to make a down payment.

"In 2024, the US built less than two million new homes," Trump said, adding that Biden admitted eight million new migrants. "Those days are over."

But industry watchers and housing policy researchers say the fundamental driver of high housing costs is a shortage of homes — and there isn't a quick fix. Building enough housing to accommodate demand in markets across the US will take many years and require significant action on the state and local levels.

Cracking down on major investors and lowering mortgage rates

Trump signed an executive order on Tuesday cracking down on major investors in homes and asked Congress to pass legislation banning "large institutional investors" from buying houses.

"Homes are built for people, not for corporations, and America will not become a nation of renters," Trump said in Davos.

Major investors, including hedge funds and private equity firms, own hundreds of thousands of single-family homes around the US, which has raised concerns that Wall Street-backed groups are outcompeting individual homebuyers, especially first-time buyers, and driving up home prices.

But these mega landlords own only about 2% of the single-family rental housing stock, according to a 2024 analysis by the GAO. And since 2022, they've slowed their purchasing as interest rates have spiked and home prices have remained high. The evidence isn't particularly strong that big investors charge more than smaller landlords, or that they outcompete other buyers.

Jenny Schuetz, vice president of housing at Arnold Ventures, previously told Business Insider that the lack of homes in markets across the country is "number one, two, and three on the list of problems." She called a potential ban "a red herring" that "distracts attention from things that actually could be helpful in improving affordability and increasing supply."

In Truth Social posts earlier this month, Trump announced that he had ordered Fannie Mae and Freddie Mac to buy up to $200 billion in mortgage-backed bonds to drive down mortgage interest rates. Mortgage rates have since fallen. But industry experts said the impact of the move would likely be somewhat short-term and overshadowed by the ongoing housing shortage and moves by the Federal Reserve.

Using a 401(k) for a down payment

Trump didn't provide further details on a plan at Davos, which was teased last week, that would enable Americans to pull from their 401(k)s to make a down payment on a home.

The proposal was first announced by Kevin Hassett, director of the National Economic Council, on Fox Business last week. "Suppose that you put 10% down on a home, and then you take 10% of the equity of the home and put it in as an asset in your 401(k). Then your 401(k) will grow over time," Hassett told the network.

Mona Mahajan, head of investment strategy at Edward Jones, said at the time that the plan may be a good step in the right direction if it gets people thinking about diversifying their asset classes and investing earlier in their careers and home ownership journeys.

Under current tax code rules, first-time homebuyers have to pay a 10% penalty on withdrawing money before the age of 59 ½ from a 401(k) for a home purchase, with the exception of hardship withdrawals or disability reasons. Over the past few years, Congress has allowed people subject to natural disasters and terminal illnesses to withdraw money from their 401(k)s without penalties.

For IRAs, they can draw up to $10,000 penalty-free but have to pay income tax.

Financial experts often discourage people from taking out 401(k) loans for reasons such as a home purchase, as doing so could lead to lost growth opportunities, though workers who do so pay themselves with interest.

It's unclear whether this plan could have legs in Congress, as it would likely require changes to the tax code.

50-year and portable mortgages

Another set of ideas that Trump didn't expand on in Davos involves changes to mortgages themselves.

In November 2025, Trump and the head of the Federal Housing Finance Agency, Bill Pulte, said the administration was exploring a 50-year mortgage option and ways buyers can lock in low interest rates from older mortgages.

The idea of a half-century-old mortgage has been widely criticized by housing economists, who argue that while 50-year loans would mean lower monthly payments, they would entail much higher interest costs for homeowners over the life of the loan and a much longer road to building equity.

Pulte also said the administration was "actively evaluating" so-called portable mortgages. These loans would enable homeowners to take their mortgage interest rate with them to a new property.

Housing economists warn that legalizing portable loans could give homeowners who are lucky enough to have an existing mortgage with a low rate an even bigger advantage over first-time homebuyers and others. The dynamic could also drive home prices up by empowering repeat buyers to spend more.

"Financing is not the solution," Kara Ng, a senior economist at Zillow, previously told Business Insider. "We're in this affordability crisis because there's a housing shortage, so changing the loan terms, having different financing products — it doesn't change the fact there aren't enough homes to go around."