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# Op-Ed: A blueprint for making housing more affordable

By David Spector, Chairman and CEO, Pennymac

January 27, 2026 min read
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Entering 2026, the American housing market faces a fundamental and persistent imbalance. Affordability is no longer a temporary squeeze driven by the ebb and flow of interest rates; it is a deep-seated structural challenge that defines the modern economy. For too long, the national conversation has centered on short-term market fluctuations while overlooking the deeper forces weighing on American families: a persistent shortage of housing supply, rising non-interest costs like insurance and property taxes, and a layer of regulatory friction that makes the entire housing system less efficient.

The data is clear: there is a supply side problem that cannot be fixed with more demand side subsidies. Short-term, demand-side policies, while well-intentioned, often unintentionally inflate prices further by putting more capital into a market with too few goods. To restore the housing ladder, the root causes of the crisis must be addressed. This requires a coordinated effort across all levels of government to reduce regulatory barriers, unlock existing inventory, and modernize the market for a new generation of homeowners. There are many levers that should be pulled to attack the housing affordability crisis, but three specific reforms stand out as immediate catalysts for positive change.

## Ending the Tax Lock

The American housing market is currently gridlocked by an outdated tax code that actively penalizes mobility. The capital gains exclusion for primary residences—$250,000 for single filers and $500,000 for married couples—has remained static since 1997. While home prices have skyrocketed over nearly three decades, these thresholds have not moved a single dollar to account for inflation.

Estimates suggest that by 2030, over 56 percent of homeowners will exceed these thresholds, effectively trapping them in their properties to avoid a massive, unintended tax hit. This "tax lock" hits older Americans hardest. Thousands of empty-nest seniors remain in large, four-bedroom family homes they no longer need because they cannot justify the six-figure tax bill triggered by a sale, and if they remain in place, their heirs pay no capital gains tax. This creates a bottleneck at the top of the housing ladder. When seniors stay put, they prevent that inventory from reaching growing families, who in turn cannot vacate the starter homes needed by first-time buyers. Raising these caps and indexing them to inflation is not a handout; it is an essential move to restore liquidity and let the housing ladder function again.

## Bringing Forward Rate Relief Through GSE Action

When interest rates eventually decline, the mortgage industry must be prepared to deliver immediate relief. Policymakers cannot allow a "refinance wall" of red tape to stand between American families and their financial health. To this end, there should be an optimized GSE refinance framework designed to eliminate the friction that currently drains borrower equity through high closing costs and administrative delays.

If a homeowner has a proven 12-month track record of on-time payments and can lower their rate by at least 50 basis points, the path to a new loan should be near-automatic. From a risk perspective, the logic is undeniable. If the refinance remains with the same GSE, no new credit risk is introduced to the system. In fact, lowering a borrower's monthly obligation actually reduces the risk of default. There is no policy rationale for charging Loan-Level Price Adjustments (LLPAs) on these rate-term refinances. Eliminating them puts hundreds of dollars a month directly back into the pockets of consumers.

## Unlocking Supply and Innovation

Affordability is ultimately a math problem. America is simply not building enough homes for first-time buyers, often because restrictive local zoning—and the tortuous permitting processes that follow—have become a blockade to progress. While land use regulations are local, the federal government should tie infrastructure funding to both zoning and permitting reform. Regardless of a community’s density, incentivize "by-right" approvals and strict "shot-clocks" for local reviews; even the best zoning reform fails if projects are trapped for years in administrative limbo.

The housing ecosystem must also scale manufactured housing as a legitimate, high-quality alternative to traditional construction. These homes cost 50% less per square foot to build than site-built alternatives, yet they are hamstrung by 1970s-era red tape. Congress should immediately eliminate the outdated "permanent chassis" mandate, which requires a steel frame even after the home is sited. This single move could shave up to $10,000 off the price of a home. Simultaneously, the FHFA could direct the GSEs to purchase mortgages secured by these homes. Creating a robust secondary market will drive down financing costs for the very borrowers who need it most.

David Spector is the Chairman and CEO of Pennymac.

This appeared in HousingWire on January 28, 2026

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