Here’s how Trump will impact the housing market in 2025: A Realtor’s Perspective

The extent of Donald Trump’s second presidency is not easy to predict It may affect the housing market. While much of what exists is pure speculation, we can look at his past policies and campaign promises to get a better idea of ​​what happened. may It is happening. For example, Trump talked about… Low mortgage ratesbut for rates decreases to 3%A serious economic downturn would be needed, which no one wants.

Throughout my experience in real estate for over 20 years, I have seen this first hand How White House Policies Could Affect AffordabilityLending and inventory. Some potential moves by the incoming administration may help buyers, while others could create new obstacles. Let’s break down what his policies could mean for you as a person Home buyer or Homeowner.

Can Trump’s policies help the housing market?

Here are some ways Trump’s policies The housing market may give a boost:

Lower taxes: Trump’s previous tax cuts under the Tax Cuts and Jobs Act in 2017 gave many American families more money while raising taxes on others. However, it’s not that easy. If he extends or expands those cuts, it could help families Save for a down payment. Changes to the SALT cap (state and local tax deductions) can also result in a tax break for homeowners High cost countries. But smaller tax revenues for the US government could increase the federal deficit.

Lifting restrictions: Trump has a history of deregulation, and we may see more of that in housing and lending. Reducing red tape may make it easier to qualify for a loan, but don’t expect changes to happen overnight — these things take time to trickle down.

Fannie Mae and Freddie Mac reform: 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 interest rates.

Infrastructure investment: Improving infrastructure can create jobs, stimulate local economies, and open new housing markets. However, this depends on how effectively these investments are implemented.

Could Trump’s policies hurt the housing market?

While some policies may help, others may make things more difficult:

Labor shortages from relocations: Stricter immigration policies could reduce the construction workforce, leading to higher construction costs New home development slows. Areas like Texas and Arizona, with a new construction boom, could be hardest hit.

High tariffs: If Trump imposes tariffs on imported building materials, such as drywall or lumber, the cost of building homes could rise. Builders are unlikely to bear these costs, but will pass them on to buyers.

Stronger growth means higher rates: Trump is pro-business and growth, but a stronger economy often means higher inflation. If that happens, then Federal Reserve You may have to slow or stop interest rate cuts, which… Keeps borrowing costs higher.

Will Trump force the Fed to change its plan to cut interest rates?

The president does not control the Fed, but the economy influences the central bank’s policy decisions. Mortgage rates are unlikely to fall 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 succeed in stimulating economic growth and keeping inflation high, the Fed may have to rein in interest rate cuts.

Read more: Are you 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 pros and cons. On the one hand, wages rise Job growth He can Helping buyers save to buy a home And qualify for a mortgage. On the other hand, strong demand could push home prices higher, especially as inventory remains tight.

This is where things get difficult. A better economy may help your paycheck, but it may make finding an affordable home more difficult.

Read more: 2025 Mortgage Outlook: Trump-era low rates unlikely to return

Can you have lower taxes and lower interest rates at the same time?

The idea of ​​lowering taxes and interest rates sounds great, but it is difficult to achieve. Lower taxes often stimulate the economy, leading to inflation. When inflation rises, the Fed usually increases 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 continue.

Read more: How does the Federal Reserve affect mortgage rates?

Should you buy a house in 2025?

The truth is that waiting for ideal market conditions It doesn’t always pay off. If mortgage rates drop significantly, more buyers will jump in, creating competition and driving prices higher.

If you are in Good financial situation – You have savings, strong credit and stability in your life – 2025 may be a good time to buy. Focus on what you can control, like what you have budget And finding the right home for your needs. Remember, it’s not about timing the market as much as it’s about timing your life.

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