The housing market has changed significantly since former President Donald Trump’s first term. Interest rates have gone from historic lows to levels we haven’t seen in more than a decade. If Trump wins a second term as president, his policies could positively and negatively affect the housing market.
Keep reading as we discuss some predictions for the housing market if Trump wins the presidency again.
Potentially Lower Interest Rates
Over the past few years, the Federal Reserve has increased interest rates to slow rising prices. This has led to higher mortgage rates, which could change under a Trump presidency.
While the president does not directly control interest rates, the administration’s fiscal policy can influence inflation and economic growth. Trump could pressure the Federal Reserve to keep interest rates low to support economic growth, which he did during his first term.
However, just because Trump wants lower interest rates doesn’t mean they will happen. Interest rates also depend on the economic conditions and the Federal Reserve’s independent assessments.
Less Regulation Could Have Positives and Negatives
Trump is overtly against “excessive” government regulations on the economy. If Trump were president again, he would likely loosen regulations on businesses and consumers. This could mean more relaxed lending standards and potentially lower mortgage costs. This could lead to increased demand for housing since it would be easier for people to purchase homes.
However, too much deregulation can also come with risks. For example, borrowers can be approved for loans that they can’t afford to pay back. Since this was one of the contributing factors in the 2008 financial crisis, it worries some financial experts.
“Trump’s administration has historically favored deregulation, which could continue to ease restrictions on construction and development,” said Dennis Shirshikov, head of growth at GoSummer.com. “This could lead to an increase in housing supply, particularly in suburban and rural areas, as builders take advantage of fewer regulatory hurdles.”
Tax Policy Changes
Shortly after Trump became president, he worked with Congress to pass the Tax Cuts and Jobs Act, which introduced significant changes to the U.S. tax code. Several key tax provisions are set to expire in 2025, and Trump has already said that he plans to make some of them permanent if he is reelected. Some of these tax cuts or modifications could affect the real estate market. This could include an interest deduction cap on mortgages and changes to capital gains tax.
“Trump is pro-business and consistent with what we saw in his first term, we expect deregulation and tax cuts to amplify the trend we’re already seeing of single-family homeownership being purchased by investors, not individuals,” said Amanda Orsen, founder and CEO of Galleon.
Trade Policies and Housing Prices
When Trump was president, he launched a trade war with China. He has said that if he is reelected, he wants to rekindle and expand the tariffs and negotiations with trade partners. These trade policies can have wider economic effects that indirectly impact the housing market. Tariffs may increase the cost of home construction materials, making new home construction and remodels more expensive or causing delays in timelines.
Infrastructure and Development
During his campaign, Trump said, “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, and hospitals. And we will put millions of our people to work as we rebuild it.”
If Trump does focus on infrastructure and development, it could potentially lead to an increase in housing supply, property values or buyers and investors in revitalized areas.
Affordable Housing
According to Freddie Mac, the housing shortage in the United States increased by 52% from 2018 to 2020, reaching a shortfall of 3.8 million units. While Trump seems focused on existing homeowners, his previous policies do not focus on building more affordable housing or preserving existing affordable housing. If he is elected to a second term, the affordable housing shortfall could continue to widen.
Other Factors
There are other factors the president doesn’t have direct control over, which could affect the housing market. Things like the unemployment rate or geopolitical events. For example, if unemployment rises and consumers start spending less, the country could start trending toward a recession under Trump.
The Fed would then cut interest rates to stimulate the economy, leading to lower mortgage rates. However, if unemployment decreases under Trump, housing prices could continue to increase. Existing homeowners with low rates will be unmotivated to sell, and new homeowners will face low inventory.
Like tariffs, foreign wars could also disrupt the trade of resources needed for home construction and renovation.
A second term with Donald Trump as president could stimulate the housing market through lower interest rates, less regulation and tax policies that favor property owners and investors. However, a second Trump term could also bring risky deregulation policies, increased construction costs due to trade tariffs and less affordable housing.
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