Allison Robbert / AFP / Bloomberg via Getty Images
What you need to know
- Donald Trump will have the opportunity, if he wins the House of Representatives and Senate during the election in 2024 for the Republicans, to either boost or harm the U.S. Housing Market.
- Trump's proposals to deregulate home construction and open federal land could help homebuilders expand inventory and lower prices.
- Trump’s tax and tariff proposals during the campaign could have kept mortgage rates at high levels.
Donald Trump, the president-elect of the United States, has an opportunity to have a significant impact on the housing market in the U.S. How might these effects look?
"The size and direction of a 'Trump bump' will depend on what campaign proposals ultimately become policy and when," said Danielle Hale, chief economist for Realtor.com. "The new administration's policies have the potential to enhance or hamper the housing recovery, and the details will matter."
Trump’s policies could help to increase the supply of new homes. Meanwhile, while the president does not set mortgage rates, some of Trump's proposed policy changes could influence their trajectory.
Trump’s Housing Policies could Help Housing Supply
According to the National Association of Realtors, a national housing shortage of up to six million homes is expected by 2023. Only 23% of the homes available were within reach for households with a monthly income below $75,000
Trump in his presidential agenda proposed opening up "limited portions of federal land to allow for new home construction." Hale says that Trump as President could increase housing inventory and ease construction.
Trump said in his election campaign that he was going to address the regulations which have made it difficult for builders of homes. The National Association of Home Builders says that regulations are responsible for a price increase of more than $93,000 on a new house.
Certain policies could affect mortgage rates and hamper supply
Trump proposed tariffs ranging from 10% to 60% for imports. According to some economists, this would result in higher inflation. Trump’s proposals to extend his 2017 Tax Cuts & Jobs Act, cut overtime income from taxes, and end the taxation of social security benefits, among others, would add $7.75 trillion to the projected debt through 2035, according to the Committee for a Responsible Federal Budget.
With some investors anticipating higher inflation or a larger federal deficit, markets have already pushed up the 10-year Treasury yield, Mortgage rates are tied to the 10-year Treasury yield, and if rates on the yield continue to rise, this would likely keep mortgage rates high.
Trump also promised to separate the two during his election campaign. “mass deportations” Undocumented immigrants, he claimed have “driven up the cost of housing” Demand is stimulated by mass deportations. The short-term impact of mass deportations could be detrimental to inventory. According to Realtor.com, a third of the residential construction workers are immigrants.
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