As Donald Trump’s second presidential term begins, the real estate and housing markets are at the center of national attention. His newly appointed cabinet and advisors, coupled with his policy inclinations, are setting the stage for a potentially transformative period. While predictions about the direction of interest rates, housing affordability, and real estate values are speculative, there are clear signals about what to monitor as his administration gets to work.
One of Trump’s most compelling appointments in this sector is that of Scott Bessent as Secretary of the Treasury. With his deep roots in financial markets, Bessent brings a focus on fiscal responsibility and macroeconomic levers. His approach to managing the national deficit and influencing monetary policy could impact interest rates. Market participants will be closely watching how Treasury policies under Bessent’s leadership interact with the Federal Reserve – particularly in an economic climate grappling with inflationary pressures.
Another significant figure is Howard Lutnick, the Secretary of Commerce, whose career spans the intersection of finance and real estate. As chairman of Newmark, one of the country’s largest commercial real estate firms, Lutnick’s industry knowledge will likely influence policies shaping commercial development and investment. His leadership could create an environment conducive to real estate expansion – though questions remain about balancing deregulation with financial stability. Investors should pay attention to regulatory shifts that might open opportunities or pose risks to long-term stability.
Scott Turner’s role as Secretary of Housing and Urban Development (HUD) adds another layer of intrigue. Turner has long championed community development and housing accessibility. His focus on reforming HUD to streamline housing programs and enhance effectiveness could result in shifts in affordable housing initiatives. Those in residential real estate or community development should monitor Turner’s policies closely.
Meanwhile, Bill Pulte’s appointment to leadership of the Federal Housing Finance Agency (FHFA) introduces a builder’s perspective to the oversight of Fannie Mae and Freddie Mac. Pulte’s potential efforts to privatize these institutions or implement new financing mechanisms could have ripple effects throughout the mortgage market. Buyers, lenders, and investors should be on the lookout for announcements from the FHFA, as changes to underwriting standards, loan limits, or funding models could significantly impact borrowing costs and housing affordability.
Trump’s broader policies will also be key. His administration’s emphasis on deregulation may ease barriers to entry in the housing market, potentially spurring development and increasing inventory. However, such measures could also reignite fears of a housing bubble if credit standards are relaxed too far. Similarly, his push for energy independence and infrastructure investment may bolster economic activity and indirectly affect housing demand in regions poised to benefit. These initiatives could influence inflationary pressures, potentially causing much volatility for interest rates.
While the future of interest rates remains uncertain, the interplay of fiscal policy, regulatory shifts, and global economic conditions will be critical. Trump’s agenda – from tax cuts to infrastructure projects – could drive growth in the short term but also stoke inflation, compelling the Federal Reserve to reconsider policy. Currently, the Fed Futures points to two rate cuts of 25bps each (although I think it will be more like three or four cuts totaling 1%) but time will tell as to what happens.
The housing and real estate sectors enter this chapter with cautious optimism. The key will be to remain vigilant – tracking developments emanating from Washington and their ripple effects across markets. While predictions may be tempting, the wisest course is to watch, assess, and adapt.
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Shmuel Shayowitz (NMLS#19871) is a respected Real Estate & Finance Executive, Writer, Speaker, Coach, and Advisor. As the President and Chief Lending Officer of Approved Funding, a leading national mortgage banker and direct lender, Shmuel has facilitated over $3 billion of mortgages over the past two decades. Shmuel’s expertise spans various licenses and certifications, including specialized mortgage underwriter, licensed real estate agent, and accredited coach. His market insights and experience are highly sought after in the real estate, finance, and coaching industries. In addition, Shmuel is a seasoned real estate investor and property manager, facilitating thousands of rentals nationwide. Shmuel can be reached at www.approvedfunding.com/shmuel.
