As the 2025 presidential election approaches, many are curious about how the housing market might be influenced under either a Trump or Harris administration. With President Joe Biden stepping out of the race, Kamala Harris emerges as the presumptive Democratic nominee, while Donald Trump remains a strong contender for the Republicans. Industry experts provide insights based on their extensive experience in government, proximity to D.C., and decades in the private sector.

Despite their different political affiliations, both Trump and Harris recognize the main challenges facing today’s housing market: high mortgage rates and a limited supply of listings. However, their approaches to addressing these issues differ significantly, leading to potentially divergent outcomes for the real estate and mortgage markets depending on who wins the November election.

Macro-Economic Landscape and Fiscal Policies

The differences between the two candidates’ housing policies begin with the macroeconomic landscape and extend to leadership changes in housing agencies, government-sponsored enterprises (GSEs), and the actions of watchdogs such as the Consumer Financial Protection Bureau (CFPB).

If Democrats Win

Independent economic advisory firm Oxford Economics predicts that Harris would pursue an economic agenda similar to Biden’s Build Back Better program. This includes supporting the bipartisan border security deal and approving tax credits for low- and middle-income households, potentially causing inflation to rise by 0.1 to 0.2 percentage points.

Despite ongoing inflationary pressures, the Federal Reserve is expected to reduce the federal funds rate in upcoming meetings, which aligns with the Democrats’ main agenda in the housing sector: affordability. “The Democrats’ agenda is very focused on equity, fair housing, and affordable housing, and the GSEs are a conduit to accomplish those policy goals,” said Eric Hagen, a BTIG analyst covering mortgage companies. Harris might reduce guarantee fees for certain borrowers and use the GSEs to create political headlines that benefit lower-income consumers.

Harris’s experience in housing finance, particularly during her tenure as the attorney general of California following the 2008 financial crisis, gives her a deep understanding of the industry. Oxford Economics analysts estimate that a Democratic sweep could result in a $143 billion investment in affordable housing through 2033. However, some experts argue that focusing on consumer demand exacerbates the existing supply issues in the housing market.

Click here to learn more and subscribe to the newsletter

Len Wolfson, a partner at Federal Hall Policy Advisors and former acting commissioner for the Federal Housing Administration (FHA) under the Trump administration, remarked, “There is going to be a more precise effort to ensure that we are building more affordable housing.” Despite acknowledging the supply problem, the Biden administration’s solutions often involve demand-side subsidies, which can lead to increased pressure on the market.

For instance, Biden’s proposed one-year tax credit of up to $10,000 for middle-class families selling their starter homes aims to address the lack of homes for sale. However, analysts believe these sellers will likely become buyers again, continuing to strain the market. Additionally, Biden announced an annual tax credit of $5,000 for two years for middle-class, first-time homebuyers. Harris has also proposed banning hidden fees and surprise late charges by banks, while targeting corporate landlords and capping unfair rent increases.

Experts argue that while the federal government naturally focuses on the demand side of the industry, there are ways to creatively increase supply. Zoning laws, crucial for building new homes, are local administrative issues, but making federal lands available and incentivizing builders could be potential solutions.

To achieve their housing goals, Democrats are likely to expand the housing ecosystem, including the FHFA, FHA, Fannie Mae, Freddie Mac, and Ginnie Mae. This could involve projects to cut insurance premiums, reduce fees, and introduce new loan products such as Freddie Mac’s closed-end second mortgages. The CFPB, under the leadership of Rohit Chopra, would continue its efforts against “junk fees” and work to eliminate medical debt from credit reports, reducing the cost of credit reports for the mortgage industry.

Despite the CFPB’s controversial stance, federal agencies are under increased scrutiny. The Supreme Court’s June decision to overturn the 1984 Chevron precedent limits federal agencies’ power to interpret laws, allowing courts to rely on their interpretations of ambiguous laws.

Jason Cave, a principal at Piedmont Risk Advisors LLC, predicts that a Democratic administration would focus on equitable and sustainable housing, pushing to lower the cost of loan origination. “In four more years, they could make meaningful changes, for example, in the cost of credit reporting,” Cave said.

Get your free guide “Passive Real Estate Investing For Busy Professionals”

If Republicans Win

Oxford Economics forecasts that a Trump administration could add between 0.3 and 0.6 percentage points to the core personal consumption expenditures price index in late 2027 and early 2028, prompting the Federal Reserve to slow or pause rate cuts in 2026 and beyond. The outcome will depend on whether provisions from the Tax Cuts and Jobs Act of 2017, set to expire at the end of 2025, are extended.

Mark Calabria, former FHFA director under Trump, noted that while corporate fiscal incentives are quasi-permanent, individual incentives are set to expire. The Trump administration may consider temporary adjustments to capital gains relief for homeownership, which has not changed since 1997. Calabria suggested that Republicans might focus on capital gains incentives rather than tax credits to reduce lock-in effects in the existing-home market.

Industry experts believe that Republicans would strengthen community banks to make construction financing more accessible, invest in apprenticeship programs for trades such as plumbing and carpentry, and release federal lands for housing development. Given Trump’s real estate background, he might leverage regulatory measures to simplify the building process and cut red tape for developers.

The Heritage Foundation’s Project 2025, labeled a “wish list,” includes proposals to “reset” the U.S. Department of Housing and Urban Development (HUD), abolish the CFPB, and increase FHA mortgage insurance premiums. Republicans are likely to support a limited FHA role to avoid encroaching on private capital and may discard rules to further cut premiums or narrow the credit box.

There is no consensus on releasing the GSEs from federal conservatorship. While some experts see no economic or political incentives, others believe a Republican administration might improve the enterprises’ capital ratios and reduce their market shares to attract private investors.

Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association (MBA), said, “In a Trump administration, whoever ends up in the FHFA director slot and Treasury secretary, you’d see a return to exploring an exit from conservatorship and recapitalizing the GSEs to have them go back to their pre-2008 status as fully-public companies not under conservatorship.”

Regarding the CFPB, a Trump administration would likely shift away from “regulation by enforcement,” which some observers attribute to Chopra’s leadership style. However, Kathy Kraninger, a Trump appointee, had approximately 70 enforcement actions from December 2018 through January 2021, compared to Chopra’s roughly 60 actions since October 2021.

Kraninger, now CEO of the Florida Bankers Association, emphasized the importance of consistency and stability in regulatory markets. She noted that a swinging regulatory pendulum is detrimental to consumers. On the topic of “junk fees,” Kraninger argued that products understood and used by consumers should not be labeled as junk fees. She also expressed concerns about eliminating medical debt from credit reports, highlighting the U.S. credit system’s unparalleled status globally.

Despite their differing approaches, Tim Rood of Impact Capitol does not believe a second Trump administration would reverse all steps taken by Biden to support minorities. He noted that Republicans have become more populist, appealing to low- to moderate-income families, minorities, and immigrants, while not holding big corporations in the same high esteem as in the past.

Share this: