As Americans closely monitor the approach of the 2024 presidential election, concerns about the current state of the economy are driving many to speculate on the potential impact of a second term for Donald Trump. The real estate sector, alongside various other industries, is particularly keen to understand the implications of a Trump victory.
Economists have extensively debated what another Trump presidency could mean, touching on aspects such as interest rates, tax policies, housing prices, and inflation.
Marty Harlee, President and CEO of First Trust Financial, anticipates that Trump would likely urge the Federal Reserve to lower interest rates to maintain economic momentum.
“If former President Donald Trump should win the upcoming election, we would see another massive refinance boom along with a record number of home sales,” Harlee told GOBankingRates. “Lowering rates would move every other industry upward as well.”
Dennis Shirshikov, a finance, economics, and accounting professor at the City University of New York, suggests that Trump’s economic policies would emphasize deregulation and tax cuts. Such measures could stimulate economic growth and enhance disposable income for many Americans, potentially boosting demand in the housing market.
“For instance, the Tax Cuts and Jobs Act of 2017, which Trump signed into law during his first term, led to an increase in after-tax income for many individuals and businesses, providing more capital for home purchases and investments in real estate,” Shirshikov noted.
With rising living costs and affordability being significant concerns for many Americans, housing and construction have become hot topics in the political arena, according to Kateryna Odarchenko, a political strategist and licensed real estate agent in Maryland.
“Donald Trump’s 2024 campaign includes several initiatives related to the housing market and construction sector, building on the policies from his previous term,” Odarchenko explained.
During his first term, Trump worked to increase homeownership rates, extended eviction moratoriums during the pandemic, and proposed the privatization of Fannie Mae and Freddie Mac.
“These efforts have implications for future homebuyers and the housing market at large,” Odarchenko said. “His administration also introduced tax reforms such as opportunity zones to stimulate investment in underdeveloped areas and capped property, income, and sales tax deductions, affecting homeowners differently across the country.”
However, Harlee warned that a Trump re-election could lead to rising housing prices and a decline in available supply if interest rates are lowered.
“In general, interest rates and the housing market always do well with Republicans in office,” Harlee stated. “I think it’s safe to say the same would be true if Trump wins reelection.”
Shirshikov cautioned that while deregulation and tax cuts can boost economic activity, they can also lead to inflation, potentially prompting the Federal Reserve to raise interest rates to control it, thereby making mortgages more expensive and reducing housing affordability.
“Trump’s tenure was marked by significant market volatility, partly due to his unconventional approach to policy and communication,” he said. “This unpredictability can create uncertainty in the housing market, causing potential buyers and investors to hesitate.”
Key Takeaways:
- A potential Trump re-election could lead to a push for lower interest rates, spurring a refinance boom and increasing home sales.
- Economic policies under Trump are likely to focus on deregulation and tax cuts, stimulating economic growth and disposable income.
- Past policies, such as the Tax Cuts and Jobs Act of 2017, had significant impacts on after-tax income, influencing home purchases and real estate investments.
- Rising costs of living and affordability issues make housing and construction key political topics.
- Potential risks include inflation from deregulation and tax cuts, possibly leading to higher interest rates and reduced housing affordability.
Conclusion:
The 2024 presidential election carries significant implications for the U.S. economy and the real estate market. A second term for Donald Trump could result in lower interest rates and economic policies that favor deregulation and tax cuts, potentially boosting the housing market. However, this could also lead to inflation and market volatility, adding uncertainty for potential homebuyers and investors.
