WSJ What’s News - Can Anything Kick-Start the U.S. Housing Market?

Episode Date: June 26, 2026

A.M. Edition for June 26. California’s proposed billionaire’s tax heads to November's ballot, teeing up a fight among Democrats over wealth, affordability and the future of their party. Plus, a New York City board approves Mayor Mamdani's rent freeze. And WSJ real estate bureau chief Craig Karmin answers listener questions about the U.S. housing shortage in the final episode of our special series. Luke Vargas hosts. Listen to all episodes in our series on ideas for fixing the housing crisis. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Plus, a New York City board approves Mayor Mom Donnie's rent-freeze. And real estate editor Craig Carman closes out our housing series by answering your questions. Like, unless mortgage rates go down, can anything kickstart home sales? The only thing that I could really think of at the moment that would seem certain to bring down mortgage rates would be a severe economic slowdown or recession. It's Friday, June 26th. I'm Luke Farcas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. New York City's Rent Guidelines Board has delivered a win for Mayor Zohan Mamdani, approving a rent freeze for roughly a million of the city's rent-regulated apartments, a signature promise of his election campaign. One member of the board, Christina Smith, resigned ahead of yesterday's vote, saying its decision had been,

cemented after Mamdani appointed six members in February, and the quote, everything since then has been theater. The rent freeze was ultimately passed seven to one over objections from some landlords who cited the rising cost of insurance and other expenses. Kenny Burgos leads the New York Apartment Association and spoke out against the rent freeze on Pix 11 News. The mayor inherited his housing crisis, but now he's going to own it. He is now choosing to freeze the rent while expenses are increasing, while his water board increases the rates to 6%, while property taxes have doubled over five years, while insurance have skyrocketed. Mamdani called the vote a historic victory for tenants, describing it as the relief that working

people deserve. The board's vote is likely to face legal challenges, as it's legally required to consider economic conditions in its decision, including costs such as taxes, utilities, maintenance, and more. A proposed billionaire tax in California is heading to. to November's ballot. That's after unsuccessful efforts by Governor Gavin Newsom to persuade a health care workers' union behind the tax to withdraw it. Speaking to the journal podcast earlier this year, reporter Laura Nelson explained what makes the proposed tax so unique. Structurally, it's very different from the way that taxation has worked in the United States historically, which is that when something changes hands, then you pay taxes. Instead, Laura explained that the one-time

five-per-cent levy would apply to California residents with net assets of a billion dollars or more. So that would mean tax collectors beginning something new, which is to take a look at the assets that people own and value them and then impose a tax on the value of those assets. So that could include stocks, that could include artwork, that could include intellectual property rights, that could be voting rights in a company that you started or helped to start. And the tax would apply to people who lived in California as of January of this year. 90% of revenue generated by the tax would be earmarked for health care and the remainder to education and food assistance.

The measure is teeing up a fight among Democrats, with Newsom warning that it could deter investment that drives the state's economy, even as polls show that a majority of Democratic voters support the tax. Complicating matters, a pair of measures funded by Google co-founder Sergey Brin and other billionaires are also heading to November's ballot, including one that would bar new taxes on a range of financial assets, and another that restricts how tax revenue can be spent in ways that directly conflict with the wealth tax. Heading overseas, lawmakers in China are working on a new bill that would empower state prosecutors to file civil suits against foreign companies alleged to be damaging China's interests. The proposed law would add to an array of legal mechanisms Beijing has created in recent

years in order to hit back at foreign sanctions and what Beijing considers coercion, particularly from the U.S. Defendants in civil lawsuits may be ordered to pay compensation and damages and can face criminal penalties if they fail to comply. A final reading on the proposed law is expected to take place by the end of this year. Meanwhile, the Commerce Department has banned the majority Chinese-owned EV company Polestar from selling new cars in the U.S. The decision represents the first major casualty of a rule to ban Chinese software and new vehicles that connect to the internet. Pollstar said it would sell its remaining stock of vehicles in the U.S. and provide access to service centers for repairs. The Commerce Department didn't respond to a request for comment.

And in markets news today, oil prices are continuing to fall as traders look past in Iranian attack yesterday on a vessel near the Strait of Hormuz and focus instead on an expected resumption of Middle East energy flows. WTI futures declined by more than 3% this morning and are down roughly $20 from a month ago. Global tech stocks are having a down day following a sharp sell-off in Asia that saw South Korean regulators halt trading as investors rushed out of memory chip stocks. The dampen sentiment comes amid a report that OpenAI is considering a further delay to its IPO. Japan's soft bank group, which has a large stake in OpenAI, tumbled over 12% earlier while a basket of European tax stocks is dragging down the region's indices.

And barring a change in sentiment today, the NASDAQ is on track for its fifth straight day of declines. Coming up, we've got the final installment of our housing series. And we're putting your questions to the journal's real estate editor. Stick around after the break. Well, as promised, we are ending this week's series on the U.S. housing shortage with Wall Street Journal real estate editor Craig Carman. Craig, in recent months, listeners and journal subscribers alike have had a lot. lot to say about the situation in the housing market and an equal amount of questions. So let's start

to address some of those, shall we? Starting with a big one that's come up again and again, are immigrants living in the U.S. unlawfully worsening the housing shortage. Back in 2024, Donald Trump pledged to ban immigrants in the U.S. illegally from getting mortgages. And last year, Vice President Vance claimed they were, quote, taking houses that ought by right go to American citizens. What's the situation here? Yeah, it's a complicated question, and you're right, it's become a highly political one. There was a study from the Urban Institute, a think tank in 2023 that said home loans to undocumented immigrants living in the U.S. are legal, but not very common. There was around 5,000 or so mortgages to undocumented immigrants, and consider that is out of a total that year of

about 3.4 million mortgages for home purchases. So you could see it's, it's, it's, it's It's a tiny fraction of the overall. On the rental side, it's a bit more complicated and there's potential for impact there. The Pew Center said that undocumented immigrants lived in a little more than 6 million households in the U.S. rental households, and that's about 10% of all the rental households. So you're starting to see a bit of an impact there. Even then, I don't think you'll see it in terms of prices in the vast majority of the country. Labor costs are rising.

and with a lot of construction companies relying on immigrant labor and often undocumented immigrant labor, it's getting tougher to find people to work on their construction sites, and that is pushing up the cost. All right. Let's shift to once homes are built, Craig, because we got some questions about how they should be used. This is something that listener Ian Kennedy from Rhode Island highlighted about a property that he was considering selling. Let's hear from Ian. Given the recent rise in mortgage rates, I'm much more leaning towards. opting to try to rent it out. Not much new inventory coming on the market here, not much new construction coming on the market here. So the rental option just seems like a better long-term plan.

Craig, this sort of own versus rent dynamic is something we've covered throughout our housing series. All of this hits at the central point of the housing supply, in air quotes, there isn't a monolith. Everyone's just trying to maximize their returns, right? How much can you truly shape what the housing supply looks like when it rests with so many individual decision makers? That's right. This market, this housing market, has been stuck in a rut, a sales rut for more than three years now. And while supply has been rising in recent months, for the most part, we've been dealing with an undersupplied market throughout much of this housing slump. What housing economists define as a balance market between supply and demand is when you have about

four to six months of supply for sale on the market. That means if no new homes were listed, it would take about four to six months to sell existing inventory at the current price. In 2021, there was only two months of supply on the market. And a big reason for that is interest rates fell to their lowest ever, and mortgage rates were around their lowest ever. A lot of people who had higher mortgage rates refinanced, and you had something like 30 million households with mortgages below 4%. and that was more than half of all the mortgages in the U.S. And when you have that, people are very reluctant to sell, and they may do stuff like the caller was talking about,

which is maybe I'll just rent it out rather than sell it because I have such a cheap mortgage. And that seems to be one of the big issues. Now, things have been getting a little better that supply figure is up to around four and a half months of supply. One thing I have seen in Congress, It's called the More Homes on the Market Act is an effort to try and goose supply back into the market, not by building new homes, but by getting existing home owners to list. And the idea behind this is they would double the amount that home sellers could exempt from capital gains to half a million dollars for single tax filers and a million for those who are filing jointly on their tax returns.

The idea is that, yes, you would be giving up your mortgage rate, but if your capital gains tax was considerably less, that would ease some of the financial burden, and that would make more people willing to list their home and bring supply back into the market. All right. So maybe a little movement or things that can be done to juice the existing home segment. So let's shift then to new construction. As we heard in the first episode, Menlo Park, California, they want density. This is a big feature of sort of their push for new housing. But this led subscribers to ask, why is there so much focus on high density and comparably less talk about expanding the suburbs? Others piled in on this same topic saying, the American Dream is a single family house with a yard.

And certain politicians keep reframing the housing issue away from that. The suburbs are sort of a complicated housing situation for the U.S. During the pandemic, when people were stuck at home, there was suddenly a housing boom in the suburbs, particularly suburbs of, say, New York City and New Jersey, Westchester, County, New York, Connecticut, and homes there were surging in price. There were still no new supply because of not a lot of room and because the NIMBY issue in the suburbs is very strong. The demand for suburban homes has cooled off a bit in recent years as more people are going back to the office. But I haven't seen many suburbs that have sort of solved the issue of welcoming,

more housing. I mean, what I think a lot of developers would like to do is build an apartment tower with a hundred or more units. And a lot of these suburbs, even building a duplex, so a home for two different families living side by side in an area zone for single family housing gets a lot of pushback. So I don't think we're going to see much change in those dynamics anytime soon. I think the same issue is echo when you go out from the suburbs to what is sometimes referred to as the exurbs, which is the area outside of the suburbs that are a little farther away from city downtowns, a little bit cheaper than the suburbs. A little bit easier to build because I think there's a lot more open space, but some of the

same issues. And because you brought up affordability there, I think we should close on that issue, one we got so many comments about, including this one from recent college graduate, Jason from Omaha. Let's hear from him. Most people are getting jobs in the range of $50,000 to $75,000, which, when I know that has a rep payment of around $900, which is pretty normal out here, they're not putting away any money. And it's not just bad because of the down payment on the house, but you also have to think about being able to keep up with those monthly payments. And I just don't foresee people's wages rising at the same level as the cost of living is.

Craig, hearing that, it makes you wonder whether everything else in the housing discussion is kind of just set dressing compared to mortgage rates. Say in a word, yes. I think, you know, mortgage rates are always a critical component to affordability. I think they're especially difficult now. because of this lock-in effect we were talking about earlier, and suddenly you have all these people who are motivated to hold on to their homes, pushing prices up higher and higher, even if the rate of price acceleration is slowed. I mean, home prices have gone up 35 consecutive months now. The median home price is over $400,000. If you put 20% down, that means you need $80,000, which is tough for a first-time homeowner to come up with. So it really comes down to mortgage rates as the variable that could make housing a bit. more affordable for more Americans. And unfortunately right now, it's tough to think of a catalyst that could meaningfully bring down mortgage rates. Craig Carmen is the Wall Street Journal's Real Estate Bureau Chief. Craig, appreciate you. Thanks so much. Thanks for your time. Appreciate it. And to hear my full interview with Craig, check out today's Your Money Briefing podcast, which we've left a link to in our show notes. And that's it for what's news for this Friday morning.

Today's show was produced by Daniel Bach and Haddy Moyer, our supervising producer, is Sandra Kilhoff, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend. Thanks for listening.