Housing affordability quietly became a major issue during the presidential election.
Nearly one-third of voters said it was among the top three issues of concern when they cast their vote on Election Day, according to a Redfin survey.
Now that President-elect Donald Trump is returning to the White House, how will his administration’s policies impact the housing market?
While no one can say for sure, here are some Trump plans that might help — or hurt — housing nationwide. All proposals come from Trump’s written campaign platform.
1. Creating a tax break for first-time buyers
The proposal: The incoming president plans to “promote homeownership through Tax Incentives and support for first-time buyers.”
How it might affect the housing market: As we reported in “8 Groups Who Can Expect New Tax Breaks Under Trump,” there are very few details about this proposal. Trump has not specified the dollar value of this tax break or how it would work.
Trump’s election opponent — Vice President Kamala Harris — also proposed a tax break for first-time buyers.
It’s worth noting that some critics have said these types of incentives actually drive home prices higher.
2. Opening federal land and reducing regulations
The proposal: Trump plans to “open limited portions of Federal Lands to allow for new home construction.”
The Los Angeles Times also reported that Trump campaign spokesperson Karoline Leavitt said that a future Trump administration would “eliminate costly regulations.”
For the record, the Harris campaign also stated it planned to promote housing construction on federal lands and to curb some regulations.
How it might affect the housing market: Regulations account for a little less than 25% of a home’s sales price, according to LendingTree. So, theoretically, reducing regulations could lower the cost of buying a home.
However, LendingTree concludes:
“Fewer regulations and more available space on which to build may reduce homebuilding costs and help increase the housing supply. But without specifics regarding what regulations might end or what land might become available for use, it’s impossible to say just how much of an impact this proposal could have.”
3. Stopping illegal immigration
The proposal: Under Trump, Republicans plan to “secure the Border, deport Illegal Aliens, and reverse the Democrats’ Open Borders Policies that have driven up the cost of Housing.”
How it might affect the housing market: Trump believes that ending illegal immigration will reduce demand for housing, thus keeping a lid on prices. But Realtor.com disagrees, saying that curbs suggested on both illegal and legal immigration could backfire:
“In the short-run, reducing immigration could severely hurt the labor supply needed for new home building since up to a third of residential construction employment consists of foreign born workers.”
In the long-term picture, Realtor.com believes that curbing immigration will lead to negative population growth, which might trigger a cascade of negative economic impacts and a decrease in equity for existing homeowners as a result of falling home prices.
4. Lowering mortgage rates
The proposal: Under Trump, Republicans plan to “reduce mortgage rates by slashing Inflation.”
How it might affect the housing market: If the new president is successful in further reducing inflation, it could lead to more rate cuts by the Federal Reserve, which in turn could drive mortgage rates lower. But at the end of the day, presidents have no direct control over mortgage rates. The free market dictates these costs.
Realtor.com senior economist Ralph McLaughlin says the real source of the affordability crisis is a lack of housing supply:
“Housing supply, or lack thereof, has plagued the U.S. housing market for at least a decade, with our estimate of a range of 2.5 million to 7.2 million unit gap from 2012 to 2023, depending on the assumptions of the analysis. Due to a combination of both geographic and legal constraints on development, we simply haven’t built enough housing when, and where, we needed it most.”
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