Donald Trump's second presidency will be certain affect the housing marketbut the question is exactly how.While there is much speculation, we can look at his past policies and campaign promises to get a better idea of what can to happen For example, Trump has spoken low mortgage ratesstill for interest rates down to 3%there must be a serious economic downturn, something that no one wants.
In my more than twenty years of real estate experience, I have seen how White House policies can affect affordabilitylending and inventory. Some potential moves by the incoming administration could help buyers, while others could create new obstacles.
Here's what the next administration's policies could mean for you as an A home buyer or home owner.
Can Trump's policies help the housing market?
Here are some ways Trump's policy can stimulate the housing market.
Lower taxes. In 2017, Trump's tax cuts under the Tax Cuts and Jobs Act brought more money back to many US households while raising taxes for others help families save for a down payment. Changes to the SALT limit (deductions for state and local taxes) can also bring tax benefits to homeowners. high value states. But smaller tax revenues for the US government could increase the federal deficit.
Deregulation. Trump has a history of cutting regulations, and we may see more in housing and loans. Less red tape could make it easier to qualify for a loan, but don't expect overnight change they take time to come down.
Fannie Mae and Freddie Mac are reforming. Trump has talked about privatizing these government-supported institutions. Supporters say it could make the mortgage market more competitive, but eliminating the government guarantee could also raise interest rates.
Infrastructure investments. Infrastructure improvements can create jobs, boost local economies and open up new housing markets, but that depends on how well these investments are implemented.
Are Trump's policies hurting the housing market?
While some policies can help, others can make things worse.
Labor shortage from displacements. Stricter immigration policies could reduce the construction workforce, leading to higher construction costs and slower new home development. Areas like Texas and Arizona with new construction could be the hardest hit.
Higher tariffs. If Trump imposes tariffs on imported building materials, such as drywall or lumber, the cost of building homes could increase. Builders likely won't eat those costs, they'll pass them on to buyers.
Stronger growth equals higher rates. Trump is pro-business and pro-growth, but a stronger economy often means higher inflation Federal Reserve may have to slow or stop interest rate cuts, which raises borrowing costs.
How might Trump affect the Federal Reserve?
The president doesn't control the Federal Reserve, but the economy influences the central bank's policy decisions.Mortgage rates are unlikely to drop significantly unless the economy slows or we enter a recession, and no one wants that trade-off.
Fed Chairman Jerome Powell recently said that monetary policy depends on the “integrity of inputs.” If Trump's policies boost economic growth and keep inflation high, the Fed may have to hold back on rate cuts.
Read more. Still chasing 2% mortgage rates? Here's why it's time to ditch them
Does a stronger economy make it better for homebuyers?
A stronger economy has its pros and cons.On the one hand, higher wages and job growth can help buyers save for a home and qualify for a mortgage.On the other hand, strong demand can drive up home prices, especially when inventory is still limited.
This is where it gets tricky: A better economy can help your salary, but it can also make it harder to find an affordable home.
Read more. Trump cannot lower interest rates. But what power does he have over the Federation?
Can you have low taxes and low interest rates at the same time?
The idea of lower taxes and lower interest rates sounds great, but it's hard to pull off. Lower taxes often stimulate the economy, leading to inflation. When inflation rises, the Fed usually raises interest rates to cool things down.
It's a balancing act, and historically you can't have both, so if taxes come down, don't hold your breath mortgage rates to follow
Read more. How does the Federal Reserve affect mortgage rates?
Should you buy a home in 2025?
The truth is that it waits for perfect market conditions doesn't always work. If mortgage rates drop significantly, more buyers will come in, creating competition and driving up prices.
If you are in a good financial position -- you have savings, solid credit and stability in your life -- 2025 may be the right time to buy.Focus on what you can control, like yours the budget and finding a home that fits your needs.Remember, it's less about timing the market and more about your life.
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