With real estate tycoon Donald Trump in the White House, the average American is likely more aware than ever of the many ways the federal government helps to subsidize real estate profits. As the average person increasingly struggles to pay rising housing costs with stagnating wages, real estate giants make out like bandits with the help of tax loopholes and direct subsidies. Already a matter of pressing national concern, this stark disparity is only likely to become more salient in the coming months as the pandemic sheds light on the risks of our housing system’s precarity and undermines many people’s fragile grip on housing stability.
This crisis already seems to be stoking a fire in the housing justice movement, with people across the country coming together to demand rent and mortgage cancellation. This energy is sure to spill over into the presidential race. And while Donald Trump is clearly an enemy to those fighting for housing justice, it is not clear that his opponent, Joe Biden, is an ally. A significant share of Joe Biden’s campaign bundlers (supporters who collect checks from their networks on the candidate’s behalf) and major donors are tied to the real estate industry and have a direct interest in the maintenance of their profitable status quo. Biden’s association with these figures casts doubt on his eventual resolve to use the executive branch’s tools to curtail real estate’s power.
Biden’s Real Estate Backing
Real estate industry figures are among Joe Biden’s most significant backers. The Presidential Power Map identifies 773 high dollar donors who had given to the Biden campaign. Of those, 116 (15% of the total) are associated* with the real estate industry. Collectively, these figures have given just over $300,000 directly to the Biden campaign.
The Biden-affiliated super PAC, Unite the Country, has also benefited from a significant sum of real estate industry-associated cash. Using FEC filings through the end of February, we identified 14 senior real estate figures who had given to Unite the Country. Collectively, those figures gave a total of just over $500,000 in amounts ranging from $12,000 to $100,000 and an average donation of $36,000.
Figures associated with the real estate industry are particularly well-represented among Joe Biden’s bundlers. Of the 262 bundlers Joe Biden has disclosed**, 45 are tied to the real estate industry. At 17% percent of his fundraising support, the real estate industry is behind only the finance, political, and legal industries as a source for Biden’s bundled cash.
Bundlers, who can raise hundreds of thousands, if not millions, of dollars from their personal networks, are especially influential figures. Sizeable fundraising hauls*** often earn these supporters a say over who makes it into the next administration, if it doesn’t win them a coveted spot themselves.
Executive Power to Curb Real Estate Giveaways
What is at stake should the preferences of these bundlers or donors be well-represented in a hypothetical Biden administration? While Joe Biden couldn’t eliminate some of the most important real estate loopholes without Congress (e.g. depreciation), there are several steps he could take, using executive power alone, to do away with unfair advantages and prevent the industry from securing new subsidies. That seems unlikely to happen, however, if many of Biden’s real estate backers have a say or a place in his administration.
Consider Opportunity Zones, for example. The Tax Cut and Jobs Act included provision for a new program that would offer tax breaks for investments in Opportunity Zones, designated areas that had struggled to attract investment independently. Many have argued that the program’s premise is flawed and that it was always going to amount to another giveaway for wealthy real estate investors.
Trump’s administration of the program, however, has made that giveaway even more generous. Tax officials, for example, chose to extend the tax benefits to investments that had already been made. If the goal is to spur new investments that would not have occurred but for the tax incentive, this move appears nonsensical. It makes sense, however if one assumes that the Trump administration is always acting to increase profits for the country’s wealthiest citizens. The Biden administration could, and should, take a different tack and eliminate this illogical giveaway (in addition to any other tax guidance that further tilts an already unfair system in real estate interests’ favor).
Federal Home Loan Banks
A Biden administration could also resist the real estate industry’s efforts to obtain even larger subsidies. At present, the Federal Housing Finance Agency (FHFA) is considering opening access to the Federal Home Loan Banks’ cheap credit to nonbank mortgage institutions and Real Estate Investment Trusts (REITs). Created during the Great Depression, the Federal Home Loan Banks were designed to support housing finance and have come to extend credit to many of the nation’s largest banks. Critics of the plan to expand their purview worry about a government sponsored entity extending credit to financial institutions that are not subject to any of the stringent regulations banks face. Others question “why they should be providing cheap liquidity for purposes such as commercial real estate.” Overall, it seems clear that this is just another unnecessary subsidy for private real estate profits (from which many of Biden’s donors may benefit).
If the plan is implemented, Biden should make it a priority to roll it back when he has the chance to nominate a new director for the FHFA when Mark Calabria’s term expires in 2024. (Biden may have discretion sooner, as the Supreme Court could make it easier next month for the president to fire Calabria in Seila Law LLC v. Consumer Financial Protection Bureau) But even if it isn’t, the real estate industry’s demands for this subsidy and others like it will not go away. Biden should demonstrate that he’s serious about resisting the real estate industry’s power by committing to appoint housing policy officials who are not tied to the real estate industry and who have a proven track record prioritizing the public good over narrow private interests.
We have only begun to feel this pandemic’s effects on housing. Amid historic job losses, many are already struggling to keep themselves sheltered. Elevated unemployment is likely to last beyond what limited relief has been extended in the way of eviction and mortgage moratoriums, meaning that we are merely pushing off deeper pain.
In these circumstances, it is in his political interest for Joe Biden to draw as stark a contrast as possible with Donald Trump. Onlookers have reason to doubt that a Biden administration would do everything in its power to limit the real estate industry’s power and profit. But Joe Biden can still prove these skeptics wrong. Biden could demonstrate his commitment to curbing the real estate industry’s influence by distancing himself from his real estate backers, pledging not to appoint any people tied to the real estate industry to his administration, and making concrete commitments to use the executive actions available to him to eliminate the industry’s unfair advantages.
* An individual is associated with a sector if he or she has at one point worked or invested in that sector or has derived significant wealth from that sector via other means (e.g. inheritance or marriage). Individuals can be associated with more than one sector.
**Biden’s bundler disclosure, which has not been updated since December (?), almost certainly no longer paints an accurate picture
***Unfortunately, while Biden belatedly disclosed the names of his bundlers, he has failed to provide necessary details about their fundraising activity. Biden lists all supporters who raise over $25,000 for the campaign but does not identify those who are likely raising much, much more and thus far more likely to have a say over his administration’s composition.