Elon Musk’s D.O.G.E is crashing the US housing market

The US housing market is collapsing, and Elon Musk’s D.O.G.E is pulling the plug on affordable housing projects across the country. Monthly housing costs in the US reached $3,104 in January, the highest on record.

Mortgage payments alone have nearly doubled in the past five years, now averaging $2,237 per month, plus $416 for property taxes and $361 for insurance. At the same time, home prices surged $31,300 to a median of $446,300, the second-highest in history.

Amid record unaffordability, the Department of Government Efficiency (D.O.G.E), a Musk-backed initiative inside the White House, directed the Department of Housing and Urban Development (HUD) to cut millions in federal housing contracts. The funding cuts have shut down projects in over 1,000 communities, hitting programs designed to address homelessness, disaster recovery, and community development. Housing advocates are calling it an attack on low-income families, but D.O.G.E has not backed down.

D.O.G.E slashes housing funds, canceling over $30 million in grants

D.O.G.E ordered HUD in February to inform non-profits that their “operations and performance in connection with the subject awards are not in compliance with the Executive Order titled ‘Ending Radical and Wasteful Government DEI Programs and Preferencing.’” The order, signed under Trump’s administration, was cited as the basis for shutting down at least eight national organizations that provided technical assistance to housing programs.

The move eliminated funding for two of the three organizations responsible for administering the Section 4 program, a federal initiative that supports housing development in underserved areas. By law, these grants must be distributed through national intermediaries, but D.O.G.E has cut off funding without congressional approval. HUD’s own guidelines say these grants must “advance housing justice” and “support underserved communities.” Instead, Musk’s government watchdog group has taken control, redirecting priorities away from affordable housing.

One of the hardest-hit organizations is the Local Initiatives Support Corporation (LISC). HUD canceled all of its Section 4 awards and technical assistance grants, erasing $30 million in federal support. LISC had been funding lead-based paint removal in Arkansas, first-time homebuyer support for teachers in the Mississippi Delta, and renovations for an abandoned mill in Maine. Now, all of those projects have stalled indefinitely.

A LISC spokesperson slammed the decision, reportedly telling Bloomberg, “This move violates congressional appropriations language, which mandates expert intermediaries manage Section 4 funds.” The spokesperson emphasized that HUD lacks the capacity to distribute these grants efficiently, meaning the funding cuts could have long-term consequences for local housing initiatives.

Enterprise and Habitat for Humanity react to sudden terminations

Another major non-profit affected is Enterprise Community Partners, which was overseeing a $32 million Section 4 contract meant to support affordable housing development. The group had spent the past year training smaller organizations to apply for and manage grants, helping low-income families access better housing opportunities. Those funds, typically distributed in grants of $50,000, have now disappeared overnight.

Enterprise CEO Shaun Donovan, who previously served as HUD secretary under Barack Obama, warned that the cuts will “raise costs for families, hobble the creation of affordable homes, forfeit local jobs, and sap opportunity from thousands of communities in all 50 states.” Despite efforts to find alternative funding sources, many local projects will be forced to shut down.

One of the few organizations that survived D.O.G.E’s purge is Habitat for Humanity. The non-profit, which also administers Section 4 funds, was not included in the termination notices sent out by HUD. The reason for this remains unclear, though Habitat’s website has noticeably less language related to racial equity and social justice compared to other non-profits targeted by D.O.G.E.

Housing crisis worsens as markets react to economic uncertainty

While D.O.G.E wipes out housing grants, the financial markets are bracing for the Federal Reserve’s next interest rate decision on Wednesday. Investors are closely watching key economic data, including February retail sales, housing starts, and existing home sales. These reports will help determine whether the Fed will hold rates steady or make adjustments in response to inflation concerns.

The S&P 500 recently bounced 2.1%, temporarily breaking a three-week downward trend. The market’s 10% drop since February 19 has rattled investors, with major stocks like Nvidia, Meta, and JP Morgan taking heavy hits. Walmart’s downbeat earnings report fueled concerns that consumer spending is weakening. Some analysts believe the market correction may not be over, especially with the ongoing economic uncertainty.

Bank of America’s consumer-stock trading desk shared a message from a client on Friday saying, “We might be late innings in the positioning unwind, but we’re early innings in the recession risk narrative.” Of course, we get more growth scares than recessions, which is a slight comfort, perhaps.

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