The Trump Effect: What a Second Term Means for Home Buyers and Sellers
As the nation grapples with soaring prices, including skyrocketing housing costs, the real estate industry is bracing for impact. With Donald Trump back in the White House, experts predict a mixed bag of consequences for home buyers and sellers.
Higher Mortgage Rates Ahead
In the short term, mortgage rates are expected to remain elevated, driven by the 10-year Treasury note’s recent surge. This means home buyers can expect to pay more for their mortgages, at least in the near future. The 30-year mortgage rate has already risen to 7.13%, and experts predict further increases.
Less Regulation, More Tax Incentives
On the other hand, a Trump administration may bring lighter regulation and more tax perks, which could benefit home buyers and builders. This could lead to increased activity in the housing market, as builders take advantage of favorable conditions.
The Impact of Tariffs and Immigration Policies
However, Trump’s proposed tariffs on imported goods and immigration policies could have a negative impact on the housing market. Higher construction costs and a potential labor shortage could drive up home prices, making it harder for first-time and moderate-income buyers to enter the market.
Federal Deficit and Mortgage Rates
The federal deficit is another wildcard that could affect mortgage rates. If the deficit increases, investors may demand higher returns, leading to higher mortgage rates. This could offset any benefits from lighter regulation and tax incentives.
Tax Credits and Opportunity Zones
On a positive note, experts predict a resurgence of housing tax credits and opportunity zones, which could stimulate affordable housing development. These programs have been shown to encourage home building and provide relief to low-income buyers.
A Shift in Regulatory Environment
With Trump in the White House, builders and lenders can expect a lighter-touch regulatory environment, which could spur more activity in the housing market. However, this shift may also lead to decreased oversight and potentially riskier lending practices.
Fannie Mae and Freddie Mac: What’s Next?
The fate of Fannie Mae and Freddie Mac, two government-sponsored enterprises that back the bulk of residential mortgages, remains uncertain. Trump allies have proposed privatizing these entities, but experts warn that any changes must be handled carefully to avoid disrupting the housing market.
The Bottom Line
For the average home buyer, not much changes immediately. Homes will still be in short supply, and rents and home prices will continue to grow if the economy remains strong. However, experts predict that a Trump economy will do better, and people may be more willing to financially stretch themselves to buy homes despite elevated mortgage rates.
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