What Will the Real Estate Market Do Under President Trump?

As President Donald Trump embarks on his second term, the real estate market faces a complex landscape shaped by his administration's policies. Here's an analysis of potential impacts:

1. Mortgage Rates and Affordability
Despite campaign promises to reduce mortgage rates to 3% or lower, forecasts suggest that rates will remain elevated. Realtor.com’s 2025 housing forecast projects an average mortgage rate of 6.3% for the year, slightly down from 6.7% in 2024. Elevated rates, coupled with high home prices, continue to challenge affordability for many potential buyers.

2. Home Prices and Supply Constraints
​Home prices are expected to rise modestly. Realtor.com forecasts a 3.7% increase through 2025, following a 4% rise in 2024 and 1.1% in 2023. This trend reflects ongoing supply constraints, as the market struggles to meet demand, leading to sustained price growth.

3. Impact of Tariffs on Construction Costs
The administration’s implementation of new tariffs on Mexican and Canadian imports is raising concerns among home builders. These tariffs are expected to increase the cost of construction materials, adding an estimated $7,500 to $10,000 to the price of building an average home. (Wall Street Journal) This escalation comes at a time when home prices and mortgage rates are already high, exacerbating affordability issues for buyers.

4. Immigration Policies and Labor Shortages
The administration’s stringent immigration policies may further strain the construction industry, which relies heavily on immigrant labor. Approximately a third of U.S. construction workers are immigrants, with nearly 14% being undocumented. Crackdowns on undocumented workers could lead to labor shortages, increasing wages and construction costs, thereby impacting housing affordability. (Redfin)
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5. Proposed "Gold Card" Visa Program
The proposed "gold card" visa program aims to attract wealthy immigrants by offering a path to citizenship for those investing at least $5 million in the U.S. While this could boost demand in the high-end real estate market, it may also exacerbate the housing affordability crisis by driving up home prices. (MarketWatch)
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6. Economic Uncertainty and Market Stability
​President Trump’s leadership style, reminiscent of his real estate developer days, is characterized by unpredictable and rapid decisions. This approach has led to disorientation among allies and adversaries, raising concerns about economic stability and international investments crucial for domestic real estate dealmaking. (Business Insider)

Conclusion
The real estate market under President Trump’s second term is poised to navigate a series of challenges and opportunities. While efforts to reduce regulations and open federal lands for development aim to alleviate supply constraints, policies such as tariffs and strict immigration enforcement could inadvertently increase construction costs and exacerbate affordability issues. Prospective buyers and industry stakeholders should stay informed and exercise caution as the market responds to these evolving policies.