Rising Rates, Big Dreams: What Trump’s Presidency Means for Your Path to Homeownership

What Does a Second Trump Presidency Mean for Housing?

As Americans gear up for a new administration, many wonder how President-elect Donald Trump’s economic policies will impact one of the biggest concerns for voters: the housing market. With mortgage rates near a 20-year high and home prices still elevated, aspiring homeowners face significant challenges. But what lies ahead for housing affordability and interest rates? Let’s break it down.

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The Current State of the Housing Market

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Mortgage Rates at Record Highs
Despite recent Federal Reserve rate cuts, mortgage rates remain stubbornly high, hovering around 7%. Why? Mortgage rates are influenced by more than just the Fed’s benchmark rate. They’re tied to the overall strength of the economy and yields on the U.S. 10-year Treasury bond, which surged after the November election.

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Home Prices Holding Steady
While the median home price has dipped slightly in 2024 to $420,000 from $435,000 a year earlier, it’s still significantly higher than pre-pandemic levels. High home prices, combined with rising interest rates, have made affordability a top concern for many Americans.

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What Could Trump’s Policies Mean for Mortgages?

President Trump’s proposed tariffs and tax cuts are expected to increase inflation. Higher inflation could lead to:

1. Rising Mortgage Rates
   If inflation grows, mortgage rates could climb even higher. Predictions suggest the average 30-year fixed mortgage rate will remain between 6% and 7% through 2025, but there’s a chance rates could edge higher if inflation spikes.
2. Federal Deficit Impact
   Proposed tax cuts and spending increases could widen the federal deficit, prompting the government to issue more bonds. This could lead to higher yields on 10-year Treasuries, which in turn would push mortgage rates higher.

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The Housing Affordability Challenge

Affordability remains a major issue, with most Americans reporting that housing in their communities has become less accessible over the past year. This challenge has hit first-time homebuyers particularly hard.

In 2024, first-time homebuyers made up just 24% of the market—the lowest share since 1981. Historically, first-time buyers have represented 40% of home sales. The result? Many young buyers are delaying homeownership, losing precious years of wealth-building opportunities.

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Why Homeownership Still Matters

Owning a home is one of the most powerful ways to build personal wealth. The difference in net worth between homeowners and renters is staggering:

• Homeowners’ median net worth: $396,200 (2022)
• Renters’ median net worth: $10,400

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While today’s housing market might feel daunting, the long-term benefits of homeownership are undeniable. Even if your first home isn’t your dream home, getting a foot in the door allows you to build equity and position yourself for the next step up.

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What’s Next for the Housing Market?

• Mortgage Rates: Expect little relief in 2025, with rates likely hovering around 6.5%.
• Home Prices: While prices may stabilize, significant drops are unlikely, as demand for housing remains strong.
• Strategy for Buyers: Focus on affordability. Consider starter homes or fixer-uppers and plan to trade up as your equity grows.

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A Real Estate Agent’s Perspective

As a real estate professional, I know how overwhelming today’s housing market can feel. But history shows us that homeownership is a cornerstone of financial security. If you're thinking about buying a home, let’s discuss how we can make your dream a reality—whether that means finding creative financing solutions, exploring new areas, or identifying properties with long-term value.

The American Dream is still alive. Let’s make it yours.

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Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.

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