4 Ways the Trump Administration Can Impact Your Real Estate Investments in the Next 3 Years
Written by
Vance Cariaga
Edited by
Angela Corry
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President Donald Trump recently made headlines by floating the idea of a 50-year mortgage, with the goal of making homes more affordable in a market where prices remain near record highs.
But it’s unclear whether that idea will ever see the light of day — or even succeed in making home ownership more affordable.
However, the Trump administration can have an impact on real estate investments in other ways. Here are four ways the president can change the course of your money over the next three years.
Interest Rate Cuts
Trump has pushed hard for the Federal Reserve to cut interest rates this year, and the central bank responded by announcing cuts in both September and October.
You can expect the administration to keep pushing for lower rates in the future, according to Jessica Robinson, a real estate investor and co-owner of Family Nest North Central Florida.
“Under a Trump-led Federal Reserve, we could very well see a more aggressive approach to cut rates, stimulating growth in the process,” she told GOBankingRates. “REITs will immediately react depending on the fall or rise of rates in 2026-27.”
Rate cuts also have a “direct, beneficial impact” on home builders and real estate investors by easing their costs and encouraging more development, the National Association of Home Builders noted in a blog.
Another impact of rate cuts is they tend to lead to lower mortgage rates, which could increase the number of potential buyers and boost real estate investment companies. Just don’t expect mortgages to suddenly become a lot cheaper from their current rate of above 6%.
“It’s not likely that 30-year fixed mortgage rates will fall soon to anywhere near their record lows in 2020 of below 3.0%, Charles Schwab in a blog.
An End to Quantitative Tightening
In addition to calling for lower rates, the Trump administration has also encouraged the Fed to end its policy of quantitative tightening. With quantitative tightening, central banks “reduce the pace of reinvestment of proceeds from maturing government bonds,” which often leads to higher rates, according to the Corporate Finance Institute.
“I expect the recent halt to quantitative tightening by the Fed to push down Treasury yields in the short term and create a brief surge in REIT valuations,” said Chad Cummings, an attorney and certified public accountant at Cummings & Cummings Law who previously worked in finance and tax.
But the relief “will not last,” he added.
“A renewed balance sheet expansion will increase long-term inflation pressure and raise the real cost of capital,” Cummings told GBR. “Investors who refinance stabilized assets in year two or year three will discover that lenders reprice spreads upward by 75 to 150 basis points to compensate for inflation risk.”
Immigration
The Trump administration’s crackdown on immigration could have a negative impact on real estate because so much of the industry depends on immigrant labor.
“Stricter immigration and labor regulations would directly affect access to blue collar jobs, specifically construction,” Robinson said. “This will largely reflect in the production of major housing projects in [areas that rely] heavily on immigrant labor due to a smaller labor pool.”
Stricter immigration enforcement is “already creating severe labor shortages” in much of the country, according to Cummings.
“Two of my clients are major home builders and this, more than anything else, has hindered their ability to deliver product timely and cost-effectively,” he said.
Tariffs/Taxes
The administration’s call for strict tariffs on imported goods has led to higher raw materials costs for real estate developers, which cuts into margins and profits.
“If tariffs on steel, copper and engineered wood remain in place or expand, I expect hard construction costs in Florida and Texas to remain elevated by 20% to 40% over 2019 levels,” Cummings said.
However, the negative tariff impact could be offset somewhat by lower corporate tax rates.
If the administration makes “another round of tax cuts” or restores regulations from the previous Tax Cuts and Jobs Act, real estate investors should benefit from “accelerated and bonus depreciation” along with pass-through deductions, Robinson said.
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