A Trump presidency could have significant impacts on the U.S. housing market, influenced by policy shifts, interest rates, tax changes, and deregulation efforts. Here’s a breakdown of potential areas of impact, providing insight into how housing trends, affordability, and investment opportunities might evolve:

Economic Policy and Housing Demand

A Trump administration might focus on pro-growth economic policies like corporate tax cuts and deregulation to stimulate business investments. This could lead to higher job growth and increased consumer spending, potentially boosting demand in the housing market. However, a rapid economic expansion may also result in inflationary pressures, which could drive interest rates up, impacting mortgage rates and, subsequently, home affordability.

In areas like Georgia and specifically metro Atlanta, job growth in forecasted to keep growing which could have a negative impact on housing affordability. According to the Mayor of Atlanta, Andre Dickens, Office, metro Atlanta is forecasted to grow from 6.5 million people in 2024 to 13 million people by 2050. That would mean metro Atlanta would have to double the amount of houses in 25 years to keep up with demand.

Mortgage Rates and Affordability

One of the primary concerns for homebuyers is mortgage rates. While Trump’s approach may favor a robust economy, potential inflation could cause the Federal Reserve to raise rates to stabilize the economy. Higher interest rates would likely increase mortgage rates, making borrowing more expensive. This could make homeownership less affordable for many, especially first-time buyers, possibly shifting the demand to rental markets instead.

Most people don’t understand there are two components to interest rates. There are short term rates which are set by the Federal Reserve. This affects things like credit cards, home equity lines, and car loans. When you see on the news that the Fed lowered rates, this is what they are talking about. Then there are long-term interest rates which are controlled by the supply and demand of the bond market. The US bond market is many times larger than the US stock market. If Trump cuts taxes and ups spending, then the US deficit will continue to rise, which makes US Bonds riskier, therefore higher. The mortgage interest rates track off the 10-year US Treasury. So, if long term bonds go up, then mortgage rates will go up making houses less affordable. There could be a situation where the fed is cutting short terms rates and the long term rates are getting higher. This is called a steepening of the yield curve.

Tax Policy and Real Estate Investment

Tax reforms could be another area of focus, potentially affecting mortgage interest deductions and property taxes. During his previous term, Trump’s tax reforms capped state and local tax (SALT) deductions, which impacted homeowners in high-tax states. A similar stance could discourage home buying in those areas and might shift demand toward states with lower tax burdens. Additionally, any changes in capital gains tax policies could influence the investment property market, either encouraging or discouraging real estate investment depending on the direction of the policy. If you are considering selling your home and want to understand the tax implications, see our article Navigating the Tax Maze: The Implications of Selling Your Home for Cash

Affordable Housing and Development

Affordable housing initiatives may take a back seat to private sector-led growth in a Trump administration. If deregulation is pursued, it could reduce construction costs, spurring developers to build more. However, this approach might favor market-rate or luxury housing, potentially leading to a shortage in affordable housing options if incentives are not directed towards lower-income developments.

Deregulation and Property Market Volatility

Deregulation may make it easier for developers and lenders to expand housing projects and financing options, potentially leading to more growth in construction and real estate markets. However, reduced regulatory oversight may increase risk in the market, reminiscent of the 2008 financial crisis, where deregulation was partly blamed for risky lending practices. Homebuyers and investors may need to be cautious if regulations around mortgage lending and property investment become more relaxed.

Rural Housing and Opportunity Zones

Rural areas, traditionally a focus for Trump, could see renewed attention through initiatives like Opportunity Zones. These zones provide tax incentives for investing in underserved areas, potentially attracting more real estate developers and increasing housing options in rural regions. However, the impact may depend on how these policies are structured and whether they truly bring long-term growth or just temporary investment spikes.

Overall, a Trump presidency could lead to a mixed outlook for the housing market, with some regions and demographics benefiting while others may face affordability challenges. Buyers, sellers, and investors would need to watch policy changes closely to adapt to any shifts in housing demand, mortgage rates, and regulatory landscapes.

All that being said, if you do need to sell your house quickly, a cash homebuyer can be a great option. Cash home buyers close quickly, and will typically buy hour home in as-is condition.  Cash home buyers are also usually more flexible with moving dates, so even though they close fast, you may be able to stay in your house for a period of time.