With Donald Trump’s recent election victory in 2024, the real estate industry is closely examining the potential effects of his proposed policies on the housing market. This comes at a crucial time as housing affordability remains a significant issue for many Americans.
The United States housing market emerged as a pivotal topic during the 2024 presidential election, largely due to skyrocketing home prices and high mortgage rates that have made home ownership challenging for a growing number of Americans. Both candidates, Vice President Harris and President-elect Trump, prioritized addressing these housing challenges. Now, Trump’s victory prompts a reevaluation of how his administration’s policies may influence the market.
Realtor.com conducted a pre-election analysis presenting a mixed assessment of Trump’s and Harris’s plans. Trump’s strategy to boost housing supply by reducing what he termed ‘unnecessary’ regulatory barriers received praise. The real estate platform acknowledged that easing these restrictions could facilitate home construction at more affordable prices, considering that federal, state, and local regulations cumulatively add over $90,000 to the cost of building a new home.
Danielle Hale, chief economist at Realtor.com, highlighted the complexities builders face due to zoning rules, building codes, and labor standards. These factors contribute to additional costs that ultimately fall on consumers. Builders and developers incur costs to adhere to regulations, wait for approvals, and pay fees, all of which inflate housing prices, Hale noted.
Additionally, Trump’s promise to reduce inflation and lower mortgage rates is anticipated to stimulate the stagnant housing market. Lowering rates could especially benefit homeowners hesitant to move due to their existing mortgages being significantly lower than current market rates, thus potentially expanding market activity.
Conversely, Realtor.com expressed concerns about Trump’s proposed tariffs and immigration policies. Increasing tariffs on imported construction materials like cement, steel, and lumber could lead to higher housing costs, given that these goods are already subject to tariffs.
Furthermore, Trump’s stricter immigration policies could adversely affect the housing sector. Despite claims from some quarters that reduced immigration might alleviate housing demand and costs, Realtor.com’s analysis suggests otherwise. It points out that foreign-born workers constitute a substantial portion of the residential construction workforce, and reducing their numbers could negatively impact the labor supply, crucial for new home development.
Moreover, the report cautions that decreasing immigration could also affect long-term demand for housing. Currently, the U.S. fertility rate is below the level needed to maintain population growth, and immigration plays a key role in filling this gap. A decline in population growth could potentially reduce the aggregate demand for housing in the future.
Trump’s proposed policies carry a mix of promises and challenges for the housing market. While plans to reduce regulatory burdens and lower mortgage rates could provide relief to some buyers, potential tariffs and decreased immigration could have unintended consequences. As the administration’s policies unfold, the real estate industry and consumers alike will closely monitor their impacts.
Source: Fox13news
