Housing Market Experts Weigh In: What a Second Trump Term Could Mean for Real Estate

Former President Trump aims to tackle the nation's housing affordability crisis through expanded home construction efforts.

'We're going to open up tracks of federal land for housing construction,' Trump announced at an Aug. 15 press briefing. 'We desperately need housing for people who can't afford what's going on now.'

The U.S. currently faces a housing deficit of 4 million homes according to National Association of Realtors data from mid-2023.

'It's evident that increased construction is the solution to this crisis,' stated Jim Tobin, who leads the National Association of Home Builders as president and CEO.

While new home construction has seen modest gains this year, industry experts indicate current building levels remain insufficient to meet strong housing demand, creating a significant supply-demand imbalance in the market.

September's single-family housing starts reached 1,027,000 units - marking a 2.7% increase from August levels, based on U.S. Census figures.

Though expanding housing supply appears straightforward, analysts caution that other Trump policy proposals could undermine affordability goals.

For instance, Trump's proposed mass deportation of immigrants could drive up construction costs, given the industry's reliance on immigrant labor, according to Jacob Channel, senior economist at LendingTree.

The former president has also suggested returning mortgage rates to pandemic-era lows, though experts note presidents lack direct control over these rates.

1. Regulatory Reform to Boost Affordability

During his first term, Trump established an executive order on 'Eliminating Regulatory Barriers to Affordable Housing' across federal, state, local and tribal jurisdictions.

'That could serve as a blueprint moving forward,' noted Dennis Shea, who directs the Bipartisan Policy Center's Terwilliger Center.

In his 2024 campaign, Trump has advocated slashing regulations and permit requirements that inflate homebuyer costs. Experts confirm these regulatory expenses ultimately impact consumer prices.

'We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half,' Trump declared in a September speech at New York's Economic Club.

Regulatory costs currently account for roughly 24% of single-family home prices and 41% of multifamily housing costs across all government levels, according to Tobin.

'Reducing the regulatory burden on residential construction will translate to lower consumer costs,' Tobin explained.

2. Construction Workforce Implications

While Trump has criticized rising home prices as a result of illegal immigration under Biden, experts note most undocumented immigrants rent rather than own homes.

These individuals typically occupy properties owned by U.S. citizens, Channel pointed out, meaning mass deportation wouldn't significantly impact housing occupancy.

However, stricter immigration policies could affect housing affordability through labor market impacts, according to industry experts.

NAHB data shows immigrants comprise approximately 31% of U.S. construction workers.

'Any disruption to immigrant labor flow will severely impact the home construction labor market,' Tobin cautioned.

The industry has struggled to attract U.S.-born workers, with a 2017 NAHB survey finding only 3% of young American adults expressed interest in construction trades.

Consequently, removing available workers could create labor shortages, potentially driving up wages and construction timelines - costs that would likely transfer to homebuyers, Channel explained.

3. Tariff Impact on Building Costs

Trump's proposed 10-20% blanket import tariff, plus potential 60-100% duties on Chinese goods, could escalate housing costs.

Experts warn that tariffs on building materials like lumber would likely increase both new construction and renovation costs.

'Any tariffs raising product costs flow directly to consumers,' Tobin noted.

Current average single-family home construction costs run approximately $392,241, according to ResiClub analysis.

'Impact severity depends on specific tariff structures,' observed Redfin chief economist Daryl Fairweather.

Industry projections anticipate roughly 1.2 million new single-family homes and 300,000 multifamily units in the coming year, Tobin indicated.

'While not yet meeting needed construction levels, output will exceed current year figures,' he stated.

Analysts say it remains unclear whether Trump would prioritize housing affordability as much as his opponent would have. His federal land proposal may provide limited relief in urban areas where housing needs are most acute, Fairweather noted.

'Federal lands are predominantly rural - this doesn't address challenges in densely populated cities most requiring assistance,' she concluded.