As Donald Trump prepares for his second presidency, the U.S. housing market stands at a pivotal juncture. Stakeholders are evaluating how the administration’s policies may influence property values, affordability, and market dynamics in 2025 and beyond. We aim to provide a balanced perspective on what to expect, who stands to gain, and who will likely lose, according to experts across multiple segments.
As Donald Trump gears up following his 2024 election victory, the housing market faces both opportunities and challenges. His previous term (2017–2021) left a lasting imprint on the real estate sector, with policies that reshaped taxation, deregulation, housing supply, and investment dynamics. While current economic conditions differ significantly from those of 2016, the policy framework established during Trump’s first presidency provides a lens through which to evaluate potential impacts. This analysis examines how the interplay of past and present conditions could shape the housing market under the upcoming administration.
Policy Legacies That Continue to Shape Real Estate
Tax Policy and Investment Dynamics
The 2017 Tax Cuts and Jobs Act (TCJA) remains a cornerstone of Trump’s economic approach. By slashing the corporate tax rate from 35% to 21%, the TCJA provided significant liquidity to real estate developers and institutional investors. Provisions such as the 20% Qualified Business Income (QBI) deduction for pass-through entities and bonus depreciation schedules catalyzed reinvestment in new projects and recalibrated investment strategies. For larger developers, these tax benefits unlocked capital for large-scale developments, while smaller firms experienced mixed success in leveraging these provisions.
However, the TCJA’s impact was uneven across the nation. The cap on state and local tax (SALT) deductions disproportionately affected high-tax states like California and New York, creating disparities in regional market activity. As Trump’s second term unfolds, there is anticipation that as many of the provisions under TCJA are due to expire in 2025, he will seek to extend or expand these provisions, further benefiting developers but possibly amplifying regional inequalities.
Deregulation and Development
Trump’s previous focus on deregulation—streamlining environmental reviews, relaxing zoning constraints, and easing lending restrictions under Dodd-Frank Act modifications—sought to accelerate construction timelines and reduce costs. These efforts particularly resonated with suburban and rural developers, facilitating expansion into secondary markets.
Yet, the deregulation push came with trade-offs. Environmental rollbacks, such as changes to wetlands protections, generated legal uncertainties, while critics argued that these policies prioritized rapid development over sustainability. In a second term, Trump’s deregulatory stance is likely to persist, presenting developers with opportunities for accelerated project approval but potentially exacerbating environmental concerns.
Opportunity Zones: A Polarizing Policy
The Opportunity Zone program, introduced through the TCJA, incentivized investment in economically distressed areas by offering tax benefits to investors. While the program spurred development in underserved regions, critics have raised concerns about gentrification and displacement. Evaluating the long-term effects of Opportunity Zones remains a challenge, though they could continue to play a central role in Trump’s economic vision.
Labor Market and Supply Chain Challenges
Immigration policies during Trump’s first presidency tightened the availability of construction labor, a sector heavily reliant on immigrant workers. This led to project delays, increased costs, and a constrained housing supply. Trade policies, including tariffs on steel and aluminum, further compounded these challenges by driving up material costs, squeezing developer margins, and contributing to affordability issues.
With labor shortages persisting and inflationary pressures mounting, the construction industry remains vulnerable. Any continuation of restrictive immigration policies or new tariffs could exacerbate these vulnerabilities, heightening tensions between supply-side constraints and market demand.
The Current Landscape: Economic and Market Dynamics
A Different Economic Context
The post-pandemic economic environment introduces variables not present during Trump’s first term. Elevated inflation, higher federal deficits, and historically high mortgage rates create a complex backdrop. Unlike 2017, when the Federal Reserve maintained a low-interest-rate policy, the current rate environment challenges affordability and suppresses buyer activity.
Property Values: Rising or Stabilizing?
Bloomberg analysts project moderate growth in property values, driven by a mix of deregulation and supply-side stimulation. However, they caution that rising borrowing costs and persistent inflation could temper demand, particularly for first-time buyers. While suburban and secondary markets may benefit from infrastructure investments and decentralization trends, urban cores could see slower growth due to affordability constraints.
Winners and Losers in the Housing Market
Summary of Policy Impact with the pros and cons of Trump’s proposed housing market policies:
| Stakeholder Group | Impact | Pros | Cons |
|---|---|---|---|
| Institutional Investors | Continued tax advantages and deregulation favoring large-scale developers and private equity investors. | – Unlocks opportunities in commercial and residential sectors. | – Greater concentration of property ownership could reduce competition and raise prices. |
| Homebuilders | Expansion of federal land for development and streamlined approval processes for construction projects. | – Accelerates construction activity, particularly in suburban areas. | – May lead to overdevelopment and strain on suburban infrastructure. |
| Secondary Markets | Decentralization trends boosting housing demand in smaller cities and emerging markets. | – Promotes growth in affordability-driven regions. | – Could lead to uneven development and economic disparities between urban and rural areas. |
| First-Time Homebuyers | High mortgage rates and inflationary pressures. | – Minimal advantages under these policies. | – Affordability challenges exacerbate entry barriers for younger and lower-income buyers. |
| Urban Renters | Rising property values and limited affordable housing options in metropolitan areas. | – Increased investment could marginally improve rental stock. | – Rent hikes disproportionately affect low-income populations in urban centers. |
| Environmental Stakeholders | Deregulation and reduced environmental oversight in urban and suburban housing projects. | – Faster project approvals for developers. | – Potential risks to urban sustainability, climate resilience, and environmental health. |
HUD’s Future and Affordability Concerns
Reports have raised questions about potential restructuring or downsizing of the Department of Housing and Urban Development (HUD). Trump’s 2025 platform hints at revisiting HUD’s mission, with proposed reforms aimed at streamlining its programs. Critics fear that such changes could undermine federal affordable housing initiatives, exacerbating inequalities in an already tight market.
Conclusion: A Market at the Crossroads
Trump’s second term presents multivarious influences on the real estate sector, where the interplay of known policies and unpredictable variables will define outcomes that only hindsight can fully reveal. Policies emphasizing deregulation, tax relief, and infrastructure investment present significant opportunities for growth, yet persistent challenges—including affordability constraints, labor shortages, and market volatility—temper these prospects. The housing market’s direction will depend largely on the administration’s capacity to balance economic incentives with the pressing need for equitable and sustainable development solutions. For stakeholders across the industry, agility, staying informed, and a forward-looking strategy will be essential to successfully navigate the complexities of the coming years.
