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It is not easy to predict how a second Donald Trump presidency could affect the real estate market. While much of what is out there is speculation, we can look at his past policies and campaign promises to get a better idea of what he means. could happen. For example, Trump has talked about lower mortgage rates, but for rates to drop to 3%, there would have to be a serious economic crisis, something no one wants.
Throughout my experience in real estate for over 20 years, I have seen firsthand how White House policies can impact affordability, lending, and inventory. Some of the incoming administration’s possible measures could help buyers, while others could create new obstacles. Let’s look at what their policies could mean for you as a home buyer or owner.
Could Trump’s policies help the housing market?
Here are some ways Trump’s policies could give the housing market a boost:
Lower taxes: Trump’s previous tax cuts under the Tax Cuts and Jobs Act in 2017 returned more money to many American households and raised taxes for others. However, it is not that easy. Extending or expanding those cuts could help families save for a down payment. Changes to the SALT limit (state and local tax deductions) could also provide tax relief to homeowners in high-cost states. But the US government’s lower tax revenues could increase the federal deficit.
Deregulation: Trump has a history of regulatory cuts, and we may see more of that in housing and lending. Less red tape could make it easier to qualify for a loan, but don’t expect changes overnight – these things take time to arrive.
Reform of Fannie Mae and Freddie Mac: Trump has talked about privatizing these government-backed institutions. Supporters say it could make the mortgage market more competitive, but eliminating the government guarantee could also raise rates.
Investment in infrastructure: Improving infrastructure could create jobs, stimulate local economies and open new real estate markets. However, this depends on how effectively these investments are implemented.
Could Trump’s policies hurt the housing market?
While some policies could help, others could complicate things:
Labor shortage due to deportations: Stricter immigration policies could reduce the construction workforce, leading to higher construction costs and slower development of new housing. Areas like Texas and Arizona, with new construction booming, could be hardest hit.
Higher rates: If Trump imposes tariffs on imported building materials, such as drywall or lumber, the cost of building homes could rise. Builders are not likely to bear those costs: they will 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. If that happens, the Federal Reserve may have to slow or stop interest rate cuts, which keep borrowing costs high.
Will Trump make the Federal Reserve change its interest rate cut plan?
The president does not control the Federal Reserve, but the economy does influence 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.
Federal Reserve Chairman Jerome Powell recently said that monetary policy depends on “the totality of incoming data.” If Trump’s policies spur economic growth and keep inflation high, the Federal Reserve may have to hold back on rate cuts.
Read more: Still chasing 2% mortgage rates? Here’s why it’s time to let them go
Does a stronger economy make things better for homebuyers?
A stronger economy has advantages and disadvantages. 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 remains limited.
This is where things get complicated. A better economy could improve your pay, but it could also make finding affordable housing even more difficult.
Read more: Mortgage predictions for 2025: Low rates unlikely to return under Trump
Can you have lower taxes and lower interest rates at the same time?
The idea of lower taxes and lower interest rates sounds great, but it is difficult to implement. Lower taxes often stimulate the economy, leading to inflation. When inflation rises, the Federal Reserve usually raises interest rates to cool things down.
It’s a balancing act and historically you can’t have both at the same time. So if taxes go down, don’t hold your breath waiting for mortgage rates to follow.
Read more: How the Federal Reserve Affects Mortgage Rates
Should you buy a house in 2025?
The truth is that waiting for perfect market conditions is not always worth it. If mortgage rates drop significantly, more buyers will step in, creating competition and driving up prices.
If you’re in a good financial position (you have savings, strong credit, and stability in your life), 2025 could be the right time to buy. Focus on what you can control, like your budget and finding the right home for your needs. Remember, it’s less about timing the market and more about timing your life.
