Deregulation: Can it Increase the Supply and Demand of Residential Housing?
The short answer is yes, but the full explanation also examines some of the tradeoffs associated with moving in this direction. Two Presidential Executive Orders (EO), issued on March 13, 2026, titled “Promoting Access to Mortgage Credit” and “Removing Regulatory Barriers to Affordable Home Construction,” aim to boost housing demand by increasing credit availability and to boost supply by lowering construction costs for U.S. homebuilders. The goal is to revitalize U.S. Existing Home Sales (which account for 87% of total home sales), hovering at the lowest levels since the Great Recession. In contrast, U.S. new single-family home sales, which account for the remaining share of the pie, have fallen to their lowest levels since 2022. Interestingly, the outcomes of these EOs are complex, and opinions among housing market analysts, advocates, and financial institutions vary.
Source: U.S. Census Bureau
Improving Access to Credit
At the core of the first EO, “Promoting Access to Mortgage Credit,” is the idea that regulatory burdens introduced after the 2008 financial crisis have unintentionally limited mortgage lending, especially among Community Banks and Credit Unions. America’s Credit Unions, President and CEO Scott Simpson, believes that this EO will make credit more readily available for prospective homebuyers.
Given that the average asset size of a Credit Union in a state like Michigan is around $700 million, these institutions face disproportionately high compliance costs relative to their size. The reporting requirements under Dodd-Frank-era regulations, including Ability-to-Repay (ATR) rules, Qualified Mortgage (QM) standards, and the Home Mortgage Disclosure Act (HMDA), have increased the compliance costs of originating mortgages. As a result, many smaller lenders have scaled back the origination of smaller-denominated mortgages needed in lower-income neighborhoods.
This EO seeks to reverse this trend by instructing regulators (such as the Consumer Financial Protection Bureau (CFPB), the Federal Reserve, and the National Credit Union Administration (NCUA)) to “right-size” these regulations. One of the key proposed changes involves raising HMDA reporting thresholds. Currently, lenders must report detailed loan-level data if they originate more than 25 closed-end mortgages annually. America’s Credit Unions has recommended raising this threshold to at least 500 mortgage loans. Increasing that threshold would exempt many smaller institutions from overly burdensome reporting requirements. Compliance with HMDA is resource-heavy, requiring specialized staff, data systems, and legal oversight. By reducing this burden, credit unions will be able to allocate more resources to lending activities rather than administrative tasks.
Supporters argue that this regulatory change could greatly improve access to credit. By reducing per-loan compliance costs, lenders may find it financially viable to originate smaller mortgages, addressing a long-standing gap because these loans typically generate less revenue.
For example, in Detroit, Michigan, Zillow estimates that a typical home sells for only $74,828, even though the widely respected Case-Shiller Index reveals that home prices in this city have increased by 2.9 times since the Great Recession (Dec. 2007-June 2009).
Zillow’s Price Estimate of a Typical Home in Detroit, Michigan
Source: Zillow
Source: S&P Global and St. Louis Federal Reserve (FRED) Database
In such areas, the fixed compliance cost of originating a mortgage can constitute a large portion of the loan’s revenue, creating a disincentive to lend. If credit unions and community banks are able to re-enter these markets, it could significantly expand homeownership opportunities for first-time buyers and low- to moderate-income families.
Of course, we would be remiss if we didn’t mention that, venturing into the broader Detroit Metropolitan market, especially in higher-end neighborhoods like Boston-Edison and Downtown, median home prices are significantly higher, ranging from $315,000 to $340,000.
Another noteworthy aspect of this EO is that it encourages the wider adoption of digital tools—such as electronic signatures, remote online notarization, and automated valuation models—which can reduce closing times and transaction costs. These improvements could result in lower fees for borrowers and enhanced operational scalability for lenders. Additionally, the order promotes increased access to liquidity through Federal Home Loan Bank (FHLB) advances, especially for institutions financing entry-level housing, and further supports greater loan origination.
In contrast, some consumer advocacy groups and some housing analysts warn that reducing regulatory oversight could reintroduce vulnerabilities that emerged during the 2008 financial crisis. The ATR and QM rules were specifically designed to ensure that borrowers could repay their loans and that lenders follow strict underwriting standards. Loosening these requirements might lead to riskier lending practices. Nonetheless, this risk may be lower for credit unions, which usually rely on relationship-based lending and have historically experienced lower default rates.
Another drawback of reducing HMDA reporting requirements is that this data is used to identify patterns of discrimination in mortgage lending. Requiring lenders to disclose detailed borrower demographics, income levels, and loan outcomes helps regulators and researchers assess if certain groups are underserved or treated unfairly. Raising reporting thresholds would decrease this relevant data and make it harder to detect discriminatory practices that could impact minority and low-income borrowers, undoing years of progress in fair housing efforts.
However, from a credit union perspective, the executive order is generally seen as a positive development because the reduction in compliance costs will improve operational efficiency and profitability. Smaller institutions, which often operate with thin margins, also stand to benefit considerably from a “cure-first” supervisory approach (included in this EO) that focuses on correcting technical errors rather than imposing fines. This change decreases regulatory uncertainty and allows credit unions to concentrate more on serving their members. At the same time, the easing of the QM safe harbor provisions for portfolio loans provides additional legal protection, encouraging lenders to extend credit to borrowers who may not meet strict QM underwriting standards but are still creditworthy.
Boosting the Supply of Housing
While increased credit availability can improve access to financing for home purchases, it does not directly address the core issue of housing supply. This is where the second executive order, “Removing Regulatory Barriers to Affordable Home Construction,” comes into play. By focusing on lowering construction costs, this EO aims to support the supply side of the housing market. The National Association of Homebuilders estimates that government regulations at the federal, state, and local levels add $93,870 to the cost of building an average new home in the United States, up from $65,224 in 2011. These costs emanate from zoning restrictions, environmental rules, building codes, and permitting delays. The executive order aims to reduce these costs by streamlining federal regulations, promoting best practices for state and local governments, and encouraging the adoption of more flexible building standards.
Source: National Association of Homebuilders
This EO also seeks to reduce the energy-efficiency and “green” building regulations, which account for a significant portion of the regulatory costs for building a typical new home.
Proponents argue that reducing construction costs will increase homebuilders’ profit margins, which could motivate them to build more homes. In markets with serious housing shortages, even minor increases in supply can help stabilize or lower prices. Supporting modular and manufactured housing, which can be produced more efficiently than traditional on-site homes, is another potentially transformative aspect of this EO. By lowering barriers to these alternative construction methods, the policy could provide more affordable housing options.
However, the effectiveness of this executive order may be somewhat limited because many of the biggest regulatory hurdles to housing construction are handled at the state and local levels. Zoning laws, land-use regulations, and local permitting processes account for a large portion of the $94,000 cost estimate. While the federal government can provide guidance and incentives, it cannot directly impose changes on local policies. Therefore, the true impact of the order will largely depend on how willing state and local governments are to adopt the suggested reforms.
In contrast, some critics have raised concerns about the potential environmental and social impacts of deregulation. Easing environmental standards could have long-term effects on sustainability, especially in regions with fragile ecosystems. Likewise, reducing building code requirements might save money but could also weaken housing quality and durability. Additionally, there is always the risk that any cost savings from deregulation may not be fully passed on to consumers, particularly in markets with limited competition or high demand.
Summary and Concluding Thoughts
Our nonpartisan review of these two EO’s, issued on March 13, 2026, revealed an ambitious effort to increase homebuyers’ access to credit and boost housing supply by easing regulations. They offer distinct advantages by lowering mortgage origination costs and expanding access to credit in smaller financial institutions and underserved markets.
In some low-cost housing cities like Detroit, Michigan, the combined effects of these two EO’s could be beneficial as homebuyers often find affordable housing prices but face significant supply constraints and limited access to credit. By making small-dollar mortgages more profitable for Credit Unions and reducing construction costs, the outcome might be a boost in housing demand and supply.
Supporters of these EO’s view them as a necessary correction to excessive regulation, making mortgages more accessible and lowering housing construction costs, which could help control housing prices. Conversely, critics argue that rolling back important safeguards might increase social risks without offering significant savings for home buyers if homebuilders do not pass those lower construction costs on to buyers.
Nevertheless, we remain hopeful that these EOs will provide a needed boost to the U.S. residential housing market, which continues to face negative economic headwinds.