A significant number of real estate professionals are not looking forward to Donald Trump moving into the White House in a few days.
A recent poll of 1,200 agents, brokers, and mortgage practitioners indicated 28.5% said they believe it will be more difficult to secure home financing after Trump takes office. As affordability pressures persist and policy changes loom, the reasons explaining this negative outlook are myriad.
These naysayers generally have a negative take on the privatization of Fannie Mae and Freddie Mac, and think first-time buyers will find it more difficult to obtain mortgages if the government-sponsored enterprises (GSEs) are released from conservatorship. But, the majority (45%) believe privatization will be better for the housing market in general.
Largely, the impact of potential policy changes could create a two-tiered market, according to the pollsters, one that “benefits from tax reform and deregulation, and another that struggles with affordability challenges.”
The survey was taken by REsimpli, a platform used by real estate investors to manage their operations, and was conducted in response to the growing uncertainty about the future of real estate market and the potential impact of proposed policy changes, the company said.
Respondents were particularly negative about the new home market, with a whopping 61% of respondents thinking that building material costs will increase as a result of the tariffs Trump has promised to impose. And 46 % said that skilled labor will decline if the new administration makes good on its intention to deport illegal immigrants.
The expectation for higher material costs squares with a recent report from the National Association of Home Builders (NAHB), which said the tariffs the incoming president has said he wants to place on China alone will raise the cost of imported building materials used in residential construction by $3.2 billion.
In another daunting finding, almost half – 44% – expect the affordable housing sector to decline. Furthermore, 27% believe that Trump’s policies will cause economic instability and increased uncertainty, leading to a decrease in real estate investments.
The impact could be especially pronounced on foreign investments, with 51% saying Trump’s policies will drive foreigners out of the real estate market.
Overall, 36% of the respondents believe Trump’s policies will hurt market recovery, which is more than the 32% who said his plans will stimulate economic growth. About 14% said his policies will have little impact.
Concerning tariffs, there are few certain details about how the Trump White House intends to implement those trade measures, save for the president’s campaign promises of placing tariff’s ranging from 10%-20% on imported goods, with a 60% tariff on imports from China.
Of the $184 billion worth of goods that were used in the construction of both new single and multi-family housing in 2023, according to the NAHB, $13 billion worth (7%) were imported. Commodities from China accounted for 27% of the imported total, while products from Mexico and Canada, two other countries targeted with tariff threats in the media by the president, accounted for 11% and 8%, respectively.
Though Trump disagrees, most economists maintain that a tariff is essentially a tax on an imported good, meaning the importer pays an additional tax for bringing in an item from another country. So, if a domestic business wanted to buy $100 worth of screws from China, it would have to pay an additional $60 to the U.S. government, under the president’s plan. The exporter, China, would still receive the $100.
By NAHB’s estimates, a 10% overall tariff with a 60% fee on China would result in a $3.2 billion increase in the cost of imported building materials used in residential construction. By product, the largest increase in cost would be for household appliances, where 54% of imports come from China.
Some 70% of sawmill and wood product imports, which already are subject to tariffs, come from Canada, and 71% of lime and gypsum products come from Mexico.
