President Trump will return to the White House in January, and economists are already laying their predictions for what a second Trump presidency will mean for US real estate. Regardless of party preference, one thing has been clear in the run-up to the 2024 election: change is needed in the real estate market to support a more robust housing industry in the years to come. Will President Trump’s policies be the key to unlocking that change? Many experts think President Trump’s second term could positively influence both US and Long Island real estate.
Deregulation to Support Increased Building Across the US
According to the National Association of Realtors (NAR), the US is experiencing a housing shortage of approximately 4 to 6 million homes. While the shortage is not a new issue, the construction challenges of the pandemic years have cast the supply shortage into greater light. The lack of available homes has also led to an affordability crisis that disproportionately affects middle to lower-income Americans. To combat this, President Trump will focus on deregulation and opening up federal land for building. In a speech he gave in New York in early September, Trump stated, “We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half.” Lower housing costs may lead consumers to spend in other areas, bolstering the US economy overall.
Taxes, Incentives, and Lower Mortgage Interest Rates
Taxes were among the hot-button issues for this year’s election, and President Trump has vowed to lower taxes. For real estate and businesses, he’s focused on cutting “the corporate tax rate from 21% to 15% and [lifting] the cap on local and state tax deductions.” If enacted, these cuts could help ease affordability and incentivize builders to keep building homes at all price points, not just the luxury end of the market.
President Trump also plans to pressure the Federal Reserve (the Fed) to lower mortgage interest rates. At writing, mortgage interest rates are sitting at 6.9% for a thirty-year fixed-rate mortgage. Trump has stated he wants to bring interest rates back down to what we saw during the height of the pandemic. Even if rates don’t dip that low again, any decrease is good news for home buyers as it increases affordability.
New Tariffs Could Present Challenges for US Housing
Will we see a blanket increase in tariffs during President Trump’s second term? The president-elect has proposed “a 10% to 20% tariff on all imports across the board, as well as a rate between 60% and 100% for goods from China.” While it’s hard to say exactly what the outcomes may be without knowing the full scope of the tariff plan, increased tariffs will likely impact the cost of lumber and other materials used in building and home renovations. The impacts may be relatively minimal in an area like Long Island, which doesn’t see much new home construction.
The second term of Trump’s presidency will undoubtedly usher in a new era for the housing market. Whether it represents a significant turning point for America remains to be seen. However, we’ll be tracking all the developments to ensure our clients have the facts they need to make educated decisions. Thinking of making a change in 2025? Whether buying or selling, we’re here to support you and ensure your move is successful! Get in touch with us today to start planning now.
The Pesce & Lanzillotta Team, at BHHS Laffey International Realty
Office: 516-888-9711
Email: info@pl-team.com
