External factors like interest rates, tax policies, and regulations can dramatically affect affordability when buying a home. Under prior Trump-era policies, both buyers and sellers felt the ripple effects of economic decisions.
As Trump prepares for his second term, potential policy changes could alter the real estate landscape again. Understanding how these changes influence costs is crucial whether you’re planning to buy soon or are just curious about the market.
Here are five ways potential Trump policies could tip the scales—making homes more affordable or more expensive.
1. Lower Interest Rates Might Save You Thousands
During Trump’s first term, his administration supported economic policies contributing to lower interest rates. Buyers with good credit often benefited, potentially saving thousands over the life of a mortgage.
Similar policies could reemerge as Trump returns to office, but rising inflation or Federal Reserve actions might complicate the picture. If rates climb, borrowing costs could spike, offsetting any initial savings.
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2. Tax Law Changes Could Increase Costs for Some
The 2017 Tax Cuts and Jobs Act, enacted during Trump’s first term, limited state and local tax deductions to $10,000 annually. This policy particularly impacted buyers in high-tax states, making homeownership more expensive for many.
With Trump returning to the White House, further changes to tax law could alter the landscape. Depending on their location and income bracket, buyers should be prepared for potential updates that might ease or heighten financial burdens.
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3. Deregulation Could Boost Housing Supply
Trump’s earlier deregulation initiatives made building easier for developers, particularly in suburban areas. This led to an increase in housing supply in many markets. However, it also intensified competition for desirable properties, sometimes increasing prices in sought-after neighborhoods.
Deregulation efforts could continue in Trump’s second term, further impacting housing supply and affordability—particularly for first-time buyers navigating limited inventory.
4. Trade Tariffs Could Increase Building Material Costs
During his first term, Trump’s trade policies, including tariffs on imported materials like steel and lumber, raised construction costs. These increased costs trickled down to homebuyers, affecting prices for new homes and renovations.
Buyers should be mindful of these potential costs if similar trade policies are reinstated. Exploring older homes or properties requiring minimal upgrades may offer cost-effective alternatives.
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5. Mortgage Interest Deduction Could Face Scrutiny
During Trump’s first term, the Tax Cuts and Jobs Act significantly reduced mortgage interest deduction benefits by doubling the standard deduction. This change made itemizing less advantageous for many homeowners, impacting housing affordability for middle-class buyers.
As Trump begins his second term, there could be renewed discussions about housing-related tax incentives. Buyers should monitor potential shifts in tax policy that might influence the financial appeal of homeownership, especially for first-time buyers or those considering higher-priced homes.
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What Buyers Can Learn from Trump Policies
Trump’s housing policies, past and future, carry mixed implications for buyers. Lower interest rates and deregulation may present opportunities, while tax changes and tariffs could introduce challenges.
As his second term approaches, staying informed and planning strategically should help you adapt to changing conditions. Whether you’re a first-time buyer or a seasoned investor, understanding the market can be your greatest tool for success.
