The 2024 presidential election has ended in a stunning political victory for Donald Trump, who will return to the White House for a second term. With a hotly contested race that saw him secure critical swing states, Trump has claimed the presidency once again, this time with the backing of a Republican-controlled Senate. Although control of the House is still uncertain, a Republican sweep of both chambers would provide Trump with considerable power to enact his policies, including those addressing the nation’s growing housing crisis.
With home prices at record highs and a mounting affordability crisis affecting millions of Americans, Trump’s second term could have a significant impact on the housing market. During his campaign, Trump positioned himself as a champion of affordable housing, promising to tackle both supply-side constraints and what he sees as the negative effects of immigration on the housing market.
The Housing Crisis: A Growing Concern
The housing affordability crisis has reached a critical point in America. Recent data reveals that nearly half of all renters are considered cost-burdened, while many aspiring homeowners are locked out of the market by skyrocketing property prices. On the campaign trail, Trump attributed the rise in home prices to increased illegal immigration under the Biden administration, arguing that it has strained housing demand.
However, as Trump prepares for a return to office, his housing policies could have complex implications. Let’s take a closer look at the key aspects of his housing agenda and what they could mean for the market.
Mass Deportation: A Controversial Solution?
One of Trump’s most controversial proposals is the mass deportation of immigrants. Trump and his running mate, J.D. Vance, have consistently claimed that illegal immigration is a major driver of the housing affordability crisis, with immigrants competing with American citizens for limited housing resources. Trump has promised to conduct the “largest deportation operation in American history,” arguing that it would reduce housing demand and ease home prices.
The reality, however, is more nuanced. While some evidence suggests that higher immigration levels can drive up rents in certain areas, experts warn that mass deportations could have significant negative consequences. Ralph McLaughlin, senior economist at Realtor.com®, explains that immigrants play a crucial role in the housing market, particularly in construction. Up to a third of residential construction workers are foreign-born, and a reduction in this labor force could severely hamper new homebuilding efforts.
LendingTree economist Jacob Channel also points out that mass deportations could destabilize the broader economy, creating ripple effects that would harm more than just the housing market. “While fewer immigrants might free up some housing, the economic fallout from such a drastic policy would likely be catastrophic,” Channel warns.
Cutting Regulations and Boosting Housing Supply
Trump has also focused on regulatory reform as a way to address the housing crisis. He has promised to slash regulations and eliminate permit requirements that he believes are driving up construction costs. In a September speech, Trump claimed that cutting these regulations could reduce the cost of new homes by as much as 50%.
While deregulation could have some positive effects—especially by reducing the costs associated with new construction—experts remain skeptical of the scale of relief that such measures could provide. The National Association of Home Builders (NAHB) estimates that regulations account for about 7% of the cost of a new home, far less than the 30% figure Trump cited.
Economists, including Channel, suggest that while streamlining the permitting process could help increase housing supply, it would not be a panacea for the deep-rooted issues in the housing market. “Even if regulations were cut, it would still be difficult to provide sufficient relief to bring down home prices significantly,” Channel notes.
One of Trump’s more promising ideas is to open up federal land for large-scale housing development. This approach, aimed at reducing taxes and regulations for developers, could help ease the housing shortage. However, there are limitations to this plan. Much of the federally-owned land is located in rural or Western regions, which may not align with where most Americans want to live and work.
The Question of Mortgage Rates
On the campaign trail, Trump also promised to lower mortgage rates, a proposal that has generated some skepticism. As many experts have pointed out, the president does not have direct control over mortgage rates, which are influenced by broader economic factors, including inflation and Federal Reserve policies.
While Trump has expressed a desire to exert more control over the Federal Reserve, experts agree that the central bank’s role in setting monetary policy will remain independent. Mortgage rates are more directly tied to investor expectations and economic forecasts, and recent market trends suggest that rates may continue to rise, driven by concerns over inflation and fiscal policy.
The Long Road Ahead for Housing Affordability
Despite his ambitious proposals, Trump’s policies may not offer an immediate solution to the country’s housing crisis. The nation’s housing shortage is the result of a decade-long trend, dating back to the aftermath of the Great Recession, when homebuilding slowed dramatically. Most economists agree that addressing this shortage will require more than just cutting red tape or shifting immigration policy.
Ken Johnson, a finance professor and real estate economist at the University of Mississippi, points out that both political parties have struggled to make significant headway on housing issues. “Housing supply has been a problem for more than 10 years, and quick fixes from either party are unlikely to resolve it,” Johnson says.
Conclusion
As Trump prepares to take office once again, his proposed policies on immigration, deregulation, and housing development will shape the future of the U.S. housing market. While some of his ideas, such as reducing regulatory burdens and expanding the availability of federal land for housing, could provide limited relief, experts remain cautious about the feasibility and effectiveness of his broader agenda.
The housing crisis is complex and multifaceted, and solving it will likely require a more comprehensive, long-term approach. As we watch Trump’s second term unfold, it will be critical to evaluate the real-world impact of his policies on the housing market and whether they can effectively address the affordability challenges facing millions of Americans.
For more updates on how political changes affect the housing market, stay tuned to our blog and share your thoughts on what Trump’s presidency means for the future of homeownership.
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