Donald Trump’s potential re-election could reshape the US housing market amid rising mortgage rates and escalating home prices, according to experts and recent data.
The current state of the housing market, marked by two decades of high borrowing costs and record home prices, is putting pressure on affordability for many Americans. With the presidential election approaching, industry specialists are examining how Trump’s policies – ranging from deregulation to tax and trade measures – could impact market dynamics, potentially easing pressure but also introducing new risks.
According to a survey published Monday by National Mortgage News, the consensus suggests that the next presidential term, regardless of the winner, will not change the course for lenders and mortgage origination businesses, although many mortgage professionals lean Republican.
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“We don’t expect the election to change anything materially for the mortgage industry,” Bose George, president of Keefe, Bruyette and Woods, told National Mortgage News.
His sentiment reflects a broader skepticism about the president’s influence over key economic levers, especially interest rates, which are controlled by the Federal Reserve rather than through direct political interventions.
However, the Wall Street Journal reported in April that members of the Trump campaign were developing a plan that would restructure the Fed under Trump (should he win in November) and give him authority over interest rate decisions.
Such a change would be of great importance to the former president, who tried to influence the Fed’s interest rate decisions during his last presidency.
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Beyond interest rates, nuances in policy under Trump’s potential leadership could foster an environment of lower regulatory pressure, according to the study. During his previous term, Trump’s administration was known for rolling back regulations, which some argue could lead to more business-friendly conditions, but also raise concerns about the risks of under-regulated financial activities.
Critics point to the potential of relaxed credit conditions that could increase market volatility.
In terms of housing agency leadership, Trump’s appointments could signal a shift toward less aggressive regulatory oversight. Observers like Bill Killmer, senior vice president for legislative and political affairs of the Mortgage Bankers Association (MBA), suggest that a Trump administration would likely adopt the less interventionist positions of previous Republican appointees, focusing strictly on legislative mandates without to extend into the ‘gray areas’. often investigated by Democratic appointees.
The Justice Department’s ongoing investigation into brokerage commissions, which was reignited during Trump’s final year in office, is also expected to wane under a Republican administration.
A change in that arena could impact the landscape of real estate transactions and potentially alleviate some of the pressure on broker commissions.
“If you were to see a change in administration, going back to a Republican regime, I think you would see a less active DOJ in this area,” KBW’s George said in the report. “So that could change the way they move things in the future.”
Further, the government’s control over Fannie Mae and Freddie Mac could shift under a second Trump administration. Trump had previously advocated ending the government’s conservatorship, signaling possible renewed efforts in that direction.
However, experts including Mark Calabria, former director of the Federal Housing Finance Agency (FHFA), warn that achieving full privatization would be a complex and lengthy process.
Finally, tax policy. According to the study, the Tax Cuts and Jobs Act, signed by Trump in 2017, is set to expire in 2025. While President Biden is willing to let the cuts lapse, Trump is calling for their extension, arguing that letting them lapse could hurt the economy .
Killmer pointed to the need for legislative action to preserve incentives that encourage real estate investment, regardless of the election outcome. However, extending the cuts would increase the federal budget deficit by $4.6 trillion, the study said, based on data from the Congressional Budget Office.
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This article What the Housing Market Could Look Like If Donald Trump Wins the 2024 Presidential Election originally appeared on Benzinga.com
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