How Trump’s 2025 Return Could Impact Your Home-Buying Plans

by Erica Wright

Hey there, fellow housing market enthusiasts! The 2024 election results have reshaped the political landscape, and with Donald Trump set to make his return to the White House, many of you are probably wondering what this means for your homeownership dreams. Let's dive into what the experts are saying and break down how these changes might affect your future home-buying plans.

The Market's Initial Response: Understanding the Immediate Impact

The housing market's reaction to the election results was swift and noticeable. If you've been watching mortgage rates (and who hasn't these days?), you've probably noticed some movement. The 10-year Treasury yield jumped 20 basis points overnight following the election results – and since mortgage rates typically dance to the Treasury's tune, this suggests we're in for an interesting period of adjustment.

"This kind of market response isn't unusual during major political transitions," financial experts remind us. "It's the market's way of processing change." Think of it like the housing market taking a deep breath before adapting to new policies.

Trump's Housing Playbook: A Closer Look at What's Coming

The Silver Linings ✨

Let's start with the good news, because there's plenty to be optimistic about:

Cutting Through the Red Tape: One of the most promising aspects of Trump's housing agenda is his pledge to slash what he calls "unnecessary" housing development regulations. Here's something that might surprise you: these regulations currently add about $90,000 to the price of new homes! Imagine what cutting even half of that could mean for affordability.

Revitalizing Communities: Remember the "opportunity zones" from Trump's first term? They're making a comeback, but with a fresh twist. These zones could be game-changers for underserved areas, potentially bringing new housing developments to communities that desperately need them. Think of it as giving overlooked neighborhoods a second chance to thrive.

Opening New Frontiers: Here's an interesting development: Trump's administration plans to make federal lands available for housing development. This isn't just about building more homes – it's about addressing our nation's critical housing shortage in a creative way. Picture new communities springing up in areas that were previously off-limits to development.

The Potential Challenges 🚧

Now, let's be real – no policy package is perfect. Here are some challenges we need to keep our eyes on:

Construction Cost Concerns: Those proposed tariffs? They're a bit of a double-edged sword. While they might protect some American industries, they could also make building materials more expensive. For perspective, previous tariffs on Canadian lumber added about $14,000 to the average cost of a new home. That's not pocket change!

Workforce Worries: Here's a crucial detail many people overlook: about 25% of our construction workforce consists of immigrant workers. With stricter immigration policies on the horizon, builders are concerned about potential labor shortages. This could mean longer construction times and, potentially, higher labor costs.

The Budget Balancing Act: Let's talk about the elephant in the room – the federal deficit. Trump's fiscal policies might widen it, and this could indirectly affect mortgage rates through increased government borrowing costs. It's like a financial domino effect that eventually reaches your mortgage payment.

Campaign Promises vs. Market Reality: Finding the Balance

During the campaign, Trump made some bold promises, including bringing mortgage rates down to 2%. While that sounds wonderful (who wouldn't want a 2% mortgage?), experts unanimously agree this is unlikely without a major economic downturn. As Mike Fratantoni from the Mortgage Bankers Association puts it, "We had to live through a pandemic to get there."

Remember: Presidents can influence the housing market through policy, but they don't have a direct line to mortgage rates. Those are determined by complex market forces that even the most powerful office in the land can't simply override.

What This Means for Different Players in the Market

First-Time Buyers 🏠

If you're planning to buy your first home, you'll want to pay extra attention. Lisa Sturtevant, chief economist at Bright MLS, suggests that homeownership might become "harder to attain for first-time and moderate-income home buyers." But don't let this discourage you! Being informed and prepared is half the battle. Consider:

Starting your savings plan earlier than planned
Looking into first-time homebuyer programs that might survive or emerge under the new administration
Keeping an eye on those opportunity zones for potential deals

Home Builders and Developers 🏗️

The building community is cautiously optimistic. Jim Tobin, CEO of the National Association of Home Builders, reports that builders welcome the reduced regulations but remain concerned about practical challenges. They're essentially saying, "Less red tape is great, but we still need workers and affordable materials."

The Mortgage Industry 📊

Keep an eye on potential changes to Fannie Mae and Freddie Mac. Their possible privatization could reshape how mortgages work in America. But don't worry – any changes would likely be gradual to maintain market stability. Think evolution, not revolution.

Your Action Plan Moving Forward

As Redfin's Chief Economist Daryl Fairweather reminds us, the fundamental challenges in the housing market won't disappear overnight. Homes will still be in relatively short supply, and borrowing costs won't magically plummet. However, being informed and adaptable puts you ahead of the game.

Here's what you can do:

Stay informed about policy changes that could affect housing in your area
Build relationships with local real estate professionals who understand your market
Keep your financial house in order – good credit and savings are always valuable
Be patient and strategic in your housing decisions
Consider how new opportunity zones or development areas might align with your housing goals

Remember, the housing market has weathered many changes over the decades. While Trump's return to the White House will certainly influence the market, your personal housing journey depends more on your preparation and timing than on who occupies the Oval Office. Stay informed, stay positive, and keep working toward your housing goals!

Whether you're a first-time buyer, a seasoned investor, or just someone trying to understand these changes, knowledge is your best tool. Keep watching how these policies develop, and don't hesitate to consult with professionals who can help you navigate your specific situation.

Thinking about how Trump's 2025 return could affect your homebuying journey? Get in touch with Vanguard Lending today to discuss your mortgage options and how upcoming changes may impact your future home. Contact Vanguard Lending Now!