According to experts and recent data, Donald Trump’s potential reelection could reshape the U.S. housing market amid soaring mortgage rates and escalating home prices.
The current state of the housing market, characterized by two-decade high borrowing costs and record home prices, is straining 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 — might influence market dynamics, potentially easing some pressures but also introducing new risks.
According to a survey issued Monday by National Mortgage News, while many mortgage professionals lean Republican, the consensus suggests that the next presidential term, regardless of the winner, may not alter the course for lenders and mortgage origination activities.
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“We’re not assuming the election changes anything significantly for the mortgage industry,” Keefe, Bruyette and Woods managing director Bose George said to National Mortgage News.
His sentiment reflects a broader skepticism about the presidential influence over key economic levers, notably interest rates, which are controlled by the Federal Reserve rather than any direct political interventions.
However, the Wall Street Journal reported in April that members of the Trump campaign were developing a plan that would see the Fed restructured under Trump (should he win in November), and he would be given authority over interest rate decisions.
Such a change would be significant for the former president, who, during his last presidency, attempted to influence the Fed on rate decisions.
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Outside of interest rates, nuances in policy under Trump’s potential leadership could foster an environment of lesser regulatory burdens, according to the survey. During his previous term, Trump’s administration was known for rolling back regulations, which some argue could again lead to more business-friendly conditions but also raise concerns about the risks of under-regulated financial activities.
Critics point to the potential for relaxed lending standards that could increase market volatility.
Regarding housing agency leadership, Trump’s appointments could signal a shift toward less aggressive regulatory oversight. Observers like Bill Killmer, the Mortgage Bankers Association’s (MBA) senior vice president for legislative and political affairs, suggest a Trump administration would likely emulate the less interventionist stances of previous Republican appointees, focusing strictly on statutory mandates without extending into the “gray areas” often explored by Democratic appointees.
The Department of Justice’s ongoing probe into Realtor commissions, which was rekindled during Trump’s last year in office, is also seen as likely to wane under a Republican administration.
A change in that arena could affect the landscape of real estate transactions and potentially ease some of the pressures on Realtor commissions.
“If you saw a change of administration, going back into a Republican regime, I do think that you would see a less active DOJ in this space,” KBW’s George said in the report. “So that might change how they move things going forward.”
Further, the government’s control over Fannie Mae and Freddie Mac could shift under a second Trump administration. Trump had previously advocated for ending their government conservatorship, signaling potential renewed efforts in that direction.
However, experts, including Federal Housing Finance Agency (FHFA) former director Mark Calabria, warn that achieving full privatization would be a complex and lengthy process.
Lastly, tax policy. According to the survey, the Tax Cuts and Jobs Act, signed by Trump in 2017, expires in 2025. While President Biden is prepared to let the cuts expire, Trump advocates extending them, arguing that their lapse could damage the economy.
Killmer pointed to a need for legislative action to maintain incentives encouraging real estate investment, regardless of the election outcome. Extending the cuts, however, would increase the federal deficit by $4.6 trillion, the survey said, citing 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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Source: finance.yahoo.com