Focus turns to how new Trump administration will tackle housing crisis

The dust has settled on a momentous 2024 US presidential election campaign that dominated headlines for months and put two sharply contrasting plans for America’s future in the spotlight – and as a second Donald Trump presidency looms into view, attention in the mortgage industry is focused on what it might mean for the housing market.

The impact on the economy of Trump’s presidency, set to begin with inauguration on January 20, remains to be seen. But it’s clear that its approach to housing will form a key component of how Americans judge his new administration: fifty-one percent (51%) of voters surveyed in a Fox News exit poll after the election suggested they were “very concerned” about the housing outlook, slightly below healthcare and food.

Solving the housing crisis should begin with slashing red tape to address the sluggish pace of home construction and lack of supply, according to a mortgage industry CEO and business owner.

Shane Kidwell (pictured top), of Dwell Mortgage Group in Washington State, told Mortgage Professional America that inventory remained the number one driver of home sales across the majority of markets he serves. “It’s not as much about the rate as it is inventory because I’ve got less than a month of inventory on the market – it’s been that way for years and so it slowed down, but it didn’t really ever equalize the market between buyers and sellers,” he said.

“There’s a significant portion of the cost of a home that’s just due to regulation. And so if Trump is actually going to drive deregulation… and if you can lower that cost, encourage builders, that would be huge for us here.”

Easing supply challenges means focusing on multifamily as well as single-family inventory, Kidwell said, with affordability often out of reach in those sectors because of the sky-high costs of rent. That meant for first-time homebuyers in the state, home prices were often well above what they could realistically afford.

Will buyers flood back into the market after the election?

Geopolitical and national turmoil have shown little sign of slowing throughout 2024, with an often acrimonious, months-long election campaign taking place against the backdrop of wars in the Middle East and Europe and continuing economic uncertainty.

Those factors potentially contributed to reluctance among some buyers to take the plunge into the housing market – but while it’s unclear whether Trump pledges such as new tariffs could stir inflationary concerns, and what the impact of his hardline immigration policy will be, hopes are growing that a degree of calmness could reemerge in the economy with the election out of the way.

After a tough period for home sales, the National Association of Realtors (NAR) has forecasted that the housing market will stabilize in the coming years, with a projected increase in home sales for 2025 and 2026 as mortgage rates level out.https://t.co/E4v8YeHLpw— Mortgage Professional America Magazine (@MPAMagazineUS) November 11, 2024

Kidwell said a potentially calmer climate could spur higher activity moving into 2025. “I think it’ll take a little bit of time because this is also coming into the holiday season,” he said.

“At least in our markets, there’s a little seasonality. People don’t necessarily want to move because if they get under contract now, they’re closing either right around Thanksgiving or right around Christmas. [But] I’m expecting next year to be a really favorable year.”

That spells positive news ahead for the mortgage industry, according to Kidwell. High interest rates and rising borrowing costs have been the main factors behind the market’s lethargy over the past two years, but the prospect of lower rates down the line in 2025 suggest an uptick in homebuying and refinance activity could be on the way.

“It’s going to be a really good season for originators,” he said. “Depending on the site you look at, 40-60% of active originators went away in the last [two years]. I’m really excited about [the future]. For our team, we weathered the storm very well. We realigned and redesigned how we operate as a company, and I think that we’re really well positioned and really excited to see what this next 12 to 24 months has for us.”

By Fergal McAlinden 14 Nov 2024