After a tight race with major implications for the housing market, Donald Trump will return to the White House for a second term, four years after losing his first re-election bid.
Trump will be the 47th president, having secured enough Electoral College votes from key states to put him over the threshold of victory. Republicans have also regained control of the Senate majority.
Control of the House could take days to determine, with a number of close races still being counted. A Republican sweep of the House and Senate would give Trump considerable leeway to pursue his agenda, including plans he has outlined to make housing more affordable.
In the early hours of Wednesday morning, Trump, surrounded by his family, told supporters in West Palm Beach, FL, that it was “a political victory like our country has never seen before” and vowed to “fight for you and your future”. .
“We will make you very happy, we will make you very proud of your vote. America has given us an unprecedented and powerful mandate,” he said.
Trump added that he “will not rest until we have delivered a strong, safe and prosperous America that you deserve and that your children deserve.”
The election unfolded against a backdrop of a housing crisis, with half of renters nationwide designated as cost-burdened, and record high house prices pushing home ownership out of reach for many.
On the campaign trail, Trump blamed rising home prices for the increase in illegal immigration during the Biden administration. He also claimed he would lower mortgage rates somewhat if elected, although presidents do not control mortgage rates.
Here’s a look at some of Trump’s signature policy proposals, and what impact they could have on the housing market.
Mass deportation of immigrants
Trump and his running mate, JD Vance, have repeatedly claimed that illegal immigration is responsible for America’s housing affordability crisis, putting immigrants in competition with citizens for scarce housing units.
Trump has promised to carry out “the largest eviction operation in American history” and argues that it will ease housing prices by reducing demand.
In reality, the evidence that immigration is a major factor in housing costs is mixed. While there is reason to believe that higher levels of immigration can drive up local rents in a city, the recent post-pandemic surge in home prices began before levels of illegal immigration increased.
Realtor.com® Senior Economist Ralph McLaughlin says the kind of massive immigration crackdown Trump is proposing would have “major and negative consequences for the U.S. housing market in both the short and long term.”
“In the short term, reduced immigration could severely damage the supply of labor needed to build new homes since up to a third of housing construction employment consists of foreign-born workers,” he says.
McLaughlin adds that, in the long run, extreme immigration restrictions could have “spillover effects on the broader economy.”
LendingTree senior economist Jacob Channel agrees, writing that mass foreclosures would not solve fundamental issues with the housing market.
“While fewer immigrants could free up some housing for those who remain in the U.S., the economic fallout from mass deportations would be catastrophic for the nation’s broader economy,” Channel says.
Cut regulations and open up federal land for construction
Trump has called for reducing regulations and permitting requirements that builders say add unnecessary costs to new homes.
“We will eliminate regulations that increase housing costs with the goal of halving the cost of a new home. We think we can do it. Regulations alone cost 30%. Fixing costs 30% of a new home,” he claimed. Trump in a speech in September at the Economic Club of New York.
However, these figures seem to be excessive. The National Association of Home Builders, a longtime industry critic of the regulations, estimates that site work and related permit fees account for 7.4% of the average new home cost, with general and overhead costs accounting for an additional 5.1 %.
Many economists agree that streamlining and eliminating regulations would help boost homebuilding and lower costs, though it’s hard to imagine achieving the extent of price easing Trump envisions.
“Less regulation and more space available to build could reduce home building costs and help increase housing supply,” says Channel. “That said, limiting regulations won’t be enough to cut prices in half, and ending some isn’t a cure-all for the problems plaguing the nation’s housing market.”
In a statement, NAHB Chairman Carl Harris congratulated Trump on his election victory.
“Throughout the campaign, voters consistently highlighted the lack of housing availability and affordability as a key issue in their voting decisions. Now is the time to take action to address the country’s housing shortage and let builders build,” he said.
Trump has also said he would open swaths of federal land to large-scale housing development.
“These areas will be ultra low tax and ultra low regulation. One of the biggest small business job creation programs of all time. We’re going to open up our country to build affordable homes so that young people and other people can buy homes,” Trump said at the September event.
That’s a point Trump and his opponent agreed on, with Harris also calling for some federal land to be used for housing and the Biden administration selling off some public land near Las Vegas for that purpose.
Economists also generally support the idea as a way to spur new home building. However, one limitation of the plan is that in many cases, there is no significant federal land located near places where people want to work and live.
Nationwide, the federal government owns about 27% of the total land area, but most of this land is located in the western US. In other regions of the country, there may be little federal land to set aside for housing.
Fed pressure to lower interest rates
Finally, Trump has also asserted that he would lower mortgage rates somewhat, although there is no clear mechanism for the president to do so.
“Lowering mortgage rates is a big factor. We’re going to bring them back, we think, to 3%, maybe even lower than that, saving the average homebuyer thousands of dollars a year,” Trump said in New York.
Mortgage rates have risen for the past four weeks in a row, reaching 6.72% last week.
“The president does not set mortgage rates. If elected, Trump probably wouldn’t be able to arbitrarily decide to lower them even if he wanted to,” Channel says.
Trump has previously shared his belief that the Federal Reserve should take orders from the president, rather than independently setting monetary policy as it currently does.
But even the Fed does not directly control mortgage rates, which follow the underlying bond market and move in response to investors’ expectations about the economy, inflation and future fiscal and monetary policy.
The Fed began cutting its key rate in September, but mortgage rates have risen steadily since then, largely due to investor fears that a Republican sweep of the White House and Congress could increase deficit spending.
Yields on the 10-year Treasury jumped to 4.44% Wednesday morning, from 4.3% a day earlier, suggesting mortgage rates will continue to rise in the near term.
“Investors are taking Trump at his word and believe that if he wins, it will lead to higher tariffs, deportations of immigrants and deficit-financed tax cuts in a full-employment economy, all of which will mean higher inflation.” high and more government borrowing,” Mark Zandi. , Moody’s Analytics chief economist said at X last week.
“The recent rise in mortgage rates is a clear indication of what investors believe a Trump victory will mean for the nation’s economy and fiscal outlook,” he added.
Trump unlikely to solve housing crisis, experts say
Most economists agree that the severe housing shortage is the root cause of the nation’s housing affordability crisis.
“Housing supply, or lack thereof, has plagued the US housing market for at least a decade, with our estimate of a range of 2.5 million to 7.2 million units from 2012 to 2023, depending on the analysis’s assumptions” , says McLaughlin. . “Due to a combination of geographic and legal constraints on development, we simply haven’t built enough housing when and where we needed it most.”
Although Trump’s proposals to cut red tape and regulations for homebuilders could help spur construction on the margins, housing economists warn that his other proposals could stifle supply.
“Simply put, what little Trump and his campaign have stated about his housing policies do not stand up to scrutiny,” Channel wrote. “Not only are his proposals incredibly vague, their implementation is likely to be difficult. Moreover, many of his proposals, such as mass deportations and the imposition of large tariffs, are likely to cause more problems than they solve.
Also, America’s housing crisis is more than a decade in the making. Construction plunged after the Great Recession and has yet to fully recover, leaving the country in a deep undersupply hole. Quick and easy fixes are unlikely to appear.
“Both Republicans and Democrats will have proposals that sound good on paper but will do very little to change the housing shortage, unfortunately,” says Ken Johnson, a professor of finance and Walker Chair of Real Estate. at the University of Mississippi. .
“As a real estate economist, I’m just here to tell you that both sides have not done a good job with the housing market over the last decade or so.”
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