What is “Parallel Prosperity”?

Parallel Prosperity is the administration’s new economic paradigm focused on narrowing the prosperity gap between asset owners and workers, especially lower and middle-income Americans.

Why is housing central to Parallel Prosperity?

Housing is the main household asset and debt for most Americans, so improving housing affordability is one of the fastest ways to impact typical families’ financial positions.

How does the current market reflect a prosperity gap?

Stock indexes like the S&P 500 remain elevated, driven by AI-related leaders, while many other stocks and most workers have not shared proportionally in those gains.

What policy tools are being considered?

Key tools include cutting interest rates, narrowing the gap between current and existing mortgage rates, and potentially declaring a national housing emergency to accelerate action.

What is the goal for the housing market in 2026?

The goal is to “unfreeze” the housing market by restoring affordability and mobility so more Americans can buy, sell, and move without being trapped by their old low-rate mortgages.

2026: Big Housing Shift - Part 1

Economy

Nov 5

Written By John Cervantes, CFA

In 2026, U.S. housing policy under “Parallel Prosperity” aims to narrow the gap between asset owners and workers by cutting rates, narrowing the mortgage‑rate lock‑in, and potentially declaring a housing emergency to unfreeze the market for typical American households.

“What’s the new economic paradigm? Parallel Prosperity”, said Treasury Secretary Scott Bessent at a Labor Day interview with the Washington Examiner.

Referring to the recent stagnation of lower and middle income Americans as they grapple with higher cost, and benefit less or not at all from a booming stock market. The administration wants to close this gap of prosperity between asset owners and providers of labor. The “have and have nots” so to speak.

Stocks on average were actually down in October, S&P 500 up. Same paradigm. Ai leading, everything else ho hum.

The Midterms are approaching, and the administration knows it takes time for policy changes to impact voters.

What can be done to improve the financial positions of most Americans?

Reduce rates and unfreeze the housing market.

“Confidence fell for consumers making less than $75K a year, but improved for most of the income groups making more than $75K, with the largest increase among those earning over $200K.”

— US Consumer Confidence October 28th, 2025

graph of 30 year mortgage rate vs average outstanding mortgage rate — *Simple but not easy.*

Close the gap between the current available mortgage rate and average existing mortgage rate, and drive a new housing cycle.
Per Sec. Bessent, “everything is on the table.” Including declaring a national housing emergency.

Referenced:

Full transcript: See the Washington Examiner’s Scott Bessent interview about a ‘blue-collar boom’

US Consumer Confidence

EconomyBond Market

John Cervantes, CFA

John Cervantes is a Partner and Senior Investment Advisor at Crossvault Capital Management, LLC, where he leverages over 17 years of experience advising and managing investment portfolios for families of high and ultra-high networth.

Before joining Crossvault Capital Management, John served as a Senior Investment Advisor at Texas Capital Bank, where he was also a voting member of the bank’s Investment Strategy Committee. Prior, he held the position of Senior Investment Manager at Merrill Lynch, managing $1.25 billion in client assets for one of the largest wealth management practices in the country. In this role, John managed a suite of investment strategies, focusing on U.S. Value Equity and Global Asset Allocation. He also developed the team’s Private Equity processes, including fund selection and client allocations.

John began his career at JPMorgan Chase before transitioning to USAA. He holds the Chartered Financial Analyst® designation and earned his BBA in Finance from the University of Texas at San Antonio.

John resides in San Antonio, Texas with his wife, Kaycee, and their two children, Edee and John Kelly.

https://www.crossvault.com/

2026: Big Housing Shift - Part 1

2026: Big Housing Shift -Part 2