ABSTRACT: This article explores the housing market policies changes during the first week of the new administration that promise to tackle longstanding affordability and access issues. From opening federal lands for development to reforming zoning and lending practices, these changes could reshape how and where we live. But what does it mean for your home’s value or the ability to purchase  in this shifting landscape?

In this first part of a two-part series, we break down the bold proposals, their potential to ease housing pressures, and the hidden challenges they may present. Stay tuned for Part II, where we’ll dive into the lessons of history and share some practical tips to help you stay ahead of the curve.

The American housing market stands at a crossroads as the Trump administration’s policy initiatives propose sweeping changes aimed at persistent housing affordability issues. These potential shifts may redefine housing development across the country. They aren’t all good—or all bad—and are best understood within the larger history of real estate challenges of that past that have been overcome.

Due to the breadth and importance of this topic, we will break it down into two parts. Below, we explore the proposed changes, their potential implications, and next week, we’ll follow up with historical context, guidance from experts in the field, and actionable insights for homeowners to consider when navigating this complex landscape.

Opening Federal Lands: A Bold Supply-Side Approach

At the forefront of the administration’s housing agenda is an ambitious plan to unlock federal lands for residential development. If approved, this move could dramatically alter supply-demand dynamics in many markets. By challenging prior land-use policies, the administration posits that restrictive practices have exacerbated housing shortages in major metropolitan areas (Fannie Mae Economic and Strategic Research Group).

The proposal includes substantial deregulation efforts aimed at addressing bureaucratic bottlenecks in the construction process. Industry analysts predict that reducing development timelines by 30-40% could accelerate housing delivery in undersupplied markets. The administration’s focus on streamlining environmental reviews, while controversial, may significantly impact how quickly projects advance from conception to completion (Wheeler). Early projections suggest that opening federal lands could add capacity for several hundred thousand new housing units annually, though actual development timelines vary significantly by location and market conditions.

This may alleviate home costs, which has a flipside ramification for current homeowners. One restrictive phenomenon that has exacerbated home affordability is some communities are homeowners themselves. William Fischel, a Dartmouth economist, coined the term “homevoter”—otherwise known as NIMBY (Not In My BackYard)—where existing homeowners oppose new development to protect their property values.

Incentivizing Zoning Reforms: A Balancing Act

The administration is advocating for zoning reform by incentivizing local governments to adopt more flexible zoning codes through federal funding mechanisms and regulatory relief. These efforts aim to increase housing density and mixed-use development without undermining state and local autonomy. For example, municipalities could receive funding to modernize zoning laws that permit multi-family units or mixed-use developments, increasing housing supply in high-demand areas (National Association of Realtors).

However, the effectiveness of these reforms depends on regional collaboration and the willingness of municipalities to embrace change. While the mid-Atlantic region offers potential for adopting such reforms, it also highlights broader national struggles with balancing urban planning, affordability, and community needs. Coastal markets, in particular, continue to face severe affordability challenges due to restrictive zoning practices (Economic Policy Analysis and Housing Costs).

Mortgage Lending and Financial Reform

Proposed changes to mortgage regulations, including potential modifications to Dodd-Frank requirements, aim to broaden access to home loans. By relaxing certain lending standards, the administration seeks to empower more Americans to achieve homeownership. However, housing economists caution that deregulation must be carefully balanced to avoid repeating the mistakes that led to the 2008 financial crisis (U.S. News). Expanded access to credit could spur demand, but without adequate safeguards, it risks introducing market instability.

Affordable housing initiatives under the administration’s policy direction prioritize market-based solutions over direct federal intervention. Proposed tax incentives for private developers who incorporate affordable units into market-rate projects exemplify this shift (Economic Policy Analysis and Housing Costs). Critics argue that while these incentives may increase affordable housing availability, they may not adequately address the needs of the lowest-income households.

Hidden Costs: Tariffs and Trade Policies

International trade policies have significant implications for housing affordability. Tariffs on Canadian lumber, for instance, have added an average of $18,600 to the cost of building a typical single-family home already. These increases are attributed to duties ranging from 8% to 20% on softwood lumber imports, a critical material for residential construction (National Association of Home Builders). The volatility in lumber prices has created unprecedented challenges for builders, complicating cost estimates and construction timelines.

According to Rajan Parajuli, an associate professor of forest economics and policy at NC State, “Up to 30% of softwood lumber consumed in the U.S. each year comes from Canada,” adding that the U.S. also lacks the capacity to meet domestic demand (Moore).

Additionally, steel and aluminum tariffs have further exacerbated these challenges, particularly in multi-family and commercial projects. With duties of 25% on steel and 10% on aluminum, manufacturers have raised prices on structural elements, fixtures, and finishing materials. Builders in urban markets reliant on imported materials face disproportionate impacts, driving up costs for entry-level homes.

The concern is two-fold, obviously the first being cost. The second is how realistic the plan is, and as Parajuli says, “Tariffs unequivocally work towards pushing domestic lumber prices higher. When that happens, it usually adds up to higher costs for consumers.”

Labor Shortages: A Persistent Barrier

The construction industry’s labor shortage remains a critical bottleneck, with over 85% of firms struggling to fill both skilled and unskilled positions. This workforce deficit stems from multiple factors, including the mass exodus of workers during the 2008 financial crisis and the accelerating retirement of veteran craftspeople. Immigration policy changes have further compounded the shortage, as the construction industry historically relied heavily on immigrant labor, which accounts for approximately 30% of its workforce (Habib).

These shortages directly impact housing affordability by extending project timelines and increasing costs. What once took six months to build now routinely requires nine to twelve months, driving up carrying costs for developers. Additionally, wage pressures for skilled tradespeople, such as electricians and plumbers, have risen at nearly twice the rate of general inflation. These increased labor costs inevitably flow through to housing prices.

Regulatory Impacts: Balancing Safety and Cost

The intricate web of building regulations and safety standards presents a complex challenge. Regulatory compliance now accounts for approximately 24% of the final cost of a new home (National Association of Home Builders). Local zoning requirements, environmental regulations, and energy efficiency standards all contribute to this figure.

Environmental regulations, such as those for stormwater management and habitat conservation, add months to project timelines and hundreds of thousands of dollars to development costs, especially in sensitive areas. Meanwhile, updates to building codes, including higher insulation levels and more efficient HVAC systems, can add $10,000 or more to a typical home’s construction costs. These requirements improve long-term sustainability but create significant upfront affordability challenges.

Having weighed the potential benefits and drawbacks of proposed market changes, I don’t believe the sky is going to fall on real estate, regardless of what policies the new administration enacts or ignores, for one simple reason—there’s no clear plan yet to resolve the housing shortage that continues to drive upward pressure. Meanwhile, the next generation is finding innovative ways to afford homes, from dual incomes to purchasing properties with rental spaces or sharing costs with housemates.

President Trump’s loosening of certain restrictions may help address issues locally, giving communities more control in tackling housing challenges on their terms. A promising movement countering NIMBY (Not In My Back Yard) is YIMBY (Yes In My Back Yard), which has begun questioning long-standing development restrictions. States like California and Oregon have even passed laws curtailing local authority to limit housing supply, potentially signaling a new chapter in the supply-demand story.

We’ll continue this discussion next week in Part II—a brief history of past housing challenges, perspectives from the field, and actionable items to help you navigate these uncertain times.

REFERENCES:

  • Fannie Mae Economic and Strategic Research Group. Housing Affordability Statistics.
  • Wheeler, S. “Trump Issues Executive Order: Emergency Price Relief on Housing.” HousingWire.
  • “Trump’s Economic Agenda and Its Effects on Mortgage Rates.” U.S. News.
  • National Association of Realtors (NAR). Housing Market Reports.
  • National Association of Home Builders (NAHB). Studies on Construction Costs.
  • Economic Policy Analysis and Housing Costs. Research on Regulatory Impacts.
  • Moore, Rajan Parajuli. “U.S. Lumber Market and Tariffs.” North Carolina State University, https://cnr.ncsu.edu/news/2025/01/us-lumber-market-trump-administration/.

– At Ritter Mortgage, we are here to help you navigate all your homeownership needs and concerns. If we can answer questions or be of service, please don’t hesitate to reach out: 410-795-8900.