External factors such as interest rates, tax policies, and regulations can greatly affect affordability when buying a home. Under previous Trump-era policies, consumers and sellers felt the negative effects of economic decisions.
As Trump prepares for his second term, potential policy changes could change the real estate landscape again. Understanding how these changes affect prices is important whether you’re planning to buy soon or just want to know about the market.
Here are five possible ways Trump’s policies could affect the scales — making homes more affordable or more expensive.
1. Low Interest Rates Could Save You Thousands
During Trump’s first term, his administration supported economic policies that contributed to lowering interest rates. Buyers with good credit often benefit, potentially saving thousands over the life of the mortgage.
Similar policies could resurface as Trump returns to office, but rising inflation or the actions of the Federal Reserve could complicate the picture. If rates rise, the cost of borrowing may increase, wiping out any initial savings.
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2. Tax Law Changes May Increase Costs for Others
The Tax Cuts and Jobs Act of 2017, enacted during Trump’s first term, limited state and local tax deductions to $10,000 a year. This policy has particularly affected consumers in high-tax states, making home ownership more expensive for many.
As Trump returns to the White House, some changes to the tax code could change the situation. Depending on their location and income bracket, buyers should be prepared for updates that may ease or increase financial burdens.
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3. Deregulation Can Improve Housing Supply
Trump’s previous repeal efforts made it easier for developers to build, especially in the suburbs. This has led to an increase in housing supply in many markets. However, it has also intensified competition for desirable properties, sometimes driving up prices in desirable properties.
Deregulation efforts are likely to continue in Trump’s second term, further impacting housing supply and affordability—especially for first-time buyers navigating limited inventory.
4. Trade Costs May Add to Construction Material Costs
During his first term, Trump’s trade policies, including tariffs on imports such as steel and lumber, increased construction costs. These increased costs have trickled down to home buyers, affecting the prices of new homes and renovations.
Buyers should be aware of these potential costs if similar trade policies are returned. Examining older homes or properties that need minor improvements may offer more cost-effective alternatives.
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5. Mortgage Interest Deductions May Face Scrutiny
During Trump’s first term, the Tax Cuts and Jobs Act significantly reduced the benefits of the mortgage interest deduction by doubling the standard deduction. This change made things easier for many homeowners, impacting the affordability of homes for middle-class buyers.
As Trump begins his second term, there may be renewed discussions about housing-related tax credits. Buyers should be aware of potential changes in tax policy that could affect the financial appeal of home ownership, especially for first-time buyers or those considering high-priced homes.
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What Consumers Can Learn From Trump’s Policies
Trump’s housing policies, past and future, have mixed effects on consumers. Low interest rates and deregulation may bring opportunities, while changes in taxes and duties may introduce challenges.
As his second term approaches, staying informed and planning properly should help you adapt to changing circumstances. Whether you are a first-time buyer or a seasoned investor, understanding the market can be your greatest tool for success.
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