Trump's puzzle of the real estate market
Trump's puzzle of the real estate market
While the designated President Donald Trump is preparing to take over this month, he faces a completely different housing market than during his first term.
growing problems of living affordability
A drastic decline in the difficulty of apartments in the past four years has met many Americans-and Trump won his presidential election 2024/06/economy-trump-reelection/"> Dissatisfaction with the economy.
Now Trump, even trillionaire and real estate developer, sees itself confronted with an apartment dilemma: the mortgage interests do not decrease, and real estate prices are expected to continue to increase in the coming years. Many economists estimate that the housing market will not look different this year than the stagnating market of recent years. At the same time, many of Trump's policies proposed, including tariffs and mass deportations, could exacerbate America's problems with the difficulty in the apartment.
increase in mortgage interest
The standard interest rate for 30-year mortgages, the most popular form of real estate financing, was just under 2.8 %during pandemic at Trumps in January 2021. Last week he was with 6.91 %. This means that people who borrow money to buy a house now have to pay hundreds or even thousands of dollars more per month than if they had bought a house four years ago at the same price.
Real estate prices are also rose considerably . According to the S&P Corelogic Case-Shiller Home Price Index, the national property prices rose by 37 % from January 2021 to October 2024.
Trump's promise of housing
During his election campaign,Trump presented no formal Political plan Explanation said Taylor Rogers that a spokesman for the Trump Vance transition team that Trump would end the crisis of the difficulty in the apartment in his coming term.
"President Trump will redeem his promise to make living affordable again by defeating historical inflation and lowering the mortgage interest," said Rogers. "President Trump will ban mortgages for illegal immigrants who raise real estate prices, abolish the federal regulations that drive up housing costs and open parts of federal state with extremely low taxes and regulations for large -scale housing.
Influence of regulations and local laws
Trump has often spoken about how regulations have generated cost loads for his real estate projects. During his election campaign, he promised to reduce the regulations for builders who could increase the list price of new houses. A study from 2021 from the National Association of Home Builders showed that regulations made up for $ 93,870 of the final price of a typical new house. At that time, the average price of a house was $ 394,300. In November this price is $ 484,000, according to the US Census Bureau.
However, many of these regulations are the result of local laws that Trump did not want to intervene during his first term. In a Guest contribution from 2020 Minister for housing and urban development, Ben Carson that they wanted to "protect America's suburbs" by supporting local zone laws for single-family houses that often blame critics for the lack of newly built affordable living space.effects of deportations and tariffs
"Much of what Trump said, points in the wrong direction when it comes to real estate prices," said Parrott.
Parrott referred to Trump's promises of massive deportations that hinder could.
An increase in immigrants can increase demand in already sub-supplied areas and at the same time improve the offer situation, since undocumented immigrants play an important role in the US construction industry.
Some of Trump's other policy suggestions could also increase the costs for housing.
"The main factor for the affordability is actually the mortgage interests," said Lawrence Yun, chief economist of the National Association of Realors. "If the mortgage interest of 7 % decreases closer to 6 % or less today, it would make a big difference in the affordability."
Despite the promise of the Trump crossing team to reduce interest rates, the mortgage interests are based on the 10-year treasure bonds, some of which are based on the perception of where inflation will develop in the future. Trump's threat of comprehensive tariffs that warn some economists could back up the inflation Keep interest rates and thus also hold up the mortgage interest.
developments on the housing market
The higher interest rates would also prevent the building contractors from driving the new building of houses.
Trump's first administration tried and failed, privatize, the lenders who guarantee 70 % of mortgages in America. If he should renew this fight, this could also lead to an increase in mortgage interest, said Yun.
living: is a solution in sight?
A solution to the living crisis in America could develop into an urgent topic for voters in the upcoming elections, the financial policy analyst Jaret Seiberg wrote in a note to customers last month.
"We believe that GOP must address inflation with entry -level houses in order to be successful in future elections," wrote Seiberg. "We believe that inflation in entry -level houses enables the Democrats to better cut off in the interim elections and to give them an advantage in the 2028 presidential election. The Republicans recognize this risk. That is the reason why we expect measures."
However,yun von der Nar believes that some of the current burdens on the American housing market may be able to decrease by itself.
real estate is longer on the market, which indicates that steeper discounts can soon be expected - and the number of outstanding home sales In December already in the fourth month in a row, according to the data of the NAR. Many house -seekers accept that the mortgage interest rates will probably not decrease around 6 % and have started not to push their purchase plans any longer.
"I think the low point of home sales was pretty much in 2024," said Yun. "More and more people will make it possible to buy, and more and more people are coming to the market to offer their real estate. I think there will be more movement on the housing market this year."
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