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It is not easy to predict what Donald Trump’s second presidency will be like can affect the real estate market. While a lot of what’s out there is guesswork, we can look at his past policies and campaign promises to get a better idea of what power happen. For example, Trump spoke about lower mortgage ratesbut for rates up to down to 3%there should be a serious economic downturn – something no one wants.
Through my experience in real estate for over 20 years, I have seen firsthand how White House policies can affect affordabilitylending and inventory. Some of the new administration’s potential moves could help customers, while others could create new obstacles. Let’s break down what his policy could mean for you home buyer or the owner of the house.
Could Trump’s policies help the housing market?
Here are some ways Trump’s policy can give a boost to the real estate market:
Lower taxes: Trump’s previous tax cuts under the Tax Cuts and Jobs Act of 2017 gave more money back to many American households while raising taxes for others. However, it is not quite that easy. If it extends or expands those cuts, it could help families save for a down payment. Changes to the SALT (State and Local Tax Credit) limit can also bring tax relief to homeowners in high cost countries. But less tax revenue for the US government could increase the federal deficit.
deregulation: Trump has a history of deregulation, 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 change overnight – these things take time to settle.
Fannie Mae and Freddie Mac Reform: Trump talked about privatizing these government-backed institutions. Supporters say it could make the mortgage market more competitive, but ending the government guarantee could also raise rates.
Investment in infrastructure: Improving infrastructure could create jobs, stimulate the local economy and open up new housing markets. However, it depends on how effectively these investments are implemented.
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Could Trump’s policies hurt the housing market?
While some policies can help, others could make things more difficult:
Labor shortage due to deportations: Stricter immigration policies could reduce the construction workforce, leading to higher construction costs and slower development of a new home. Areas like Texas and Arizona, with a boom in new construction, could be hardest hit.
More tariffs: If Trump imposes tariffs on imported building materials, such as drywall or lumber, the cost of building homes could rise. Builders probably 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. If this happens, Federal Reserve may have to slow or stop interest rate cuts, which keeps borrowing costs higher.
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Will Trump force the Fed to change its plan to cut interest rates?
The president does not control the Federal Reserve, but the economy influences the policy decisions of the central bank. Mortgage rates are unlikely to drop significantly unless the economy slows or we enter a recession—and no one wants that trade-off.
Fed President Jerome Powell recently said that monetary policy depends on “the totality of incoming data.” If Trump’s policies stimulate economic growth and keep inflation high, the Fed may have to hold off 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 home buyers?
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 push real estate prices higher, especially when inventory is still low.
This is where it gets tricky. Better affordability could help your paycheck, but it could also make finding an affordable home even more difficult.
Read more: Mortgage predictions for 2025: Low rates unlikely to return under Trump
Can you have lower taxes and lower interest at the same time?
The idea of lower taxes and lower interest rates sounds great, but it’s hard to do. 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 at the same time. So if taxes go down, don’t hold your breath waiting mortgage rates to follow.
Read more: How the Federal Reserve Affects Mortgage Rates
Should you buy a house in 2025?
The truth is that they are waiting for perfect market conditions it doesn’t always pay off. If mortgage rates drop significantly, more buyers will jump 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 could be a good time to buy. Focus on what you can control, like yourself budget and finding the right home for your needs. Remember, it’s less about timing the market and more about timing your life.
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