Trump’s Top Picks, Plans Offer Insight Into Direction Of Real Estate Market
By CHUCK GREEN and KIMBERLEY HAAS
Mirror, mirror on the high-ceilinged, lavishly patterned wall, with Donald Trump’s recent reelection, what direction will the U.S. real estate market take?
When it comes to the fate of the market, the personal history of top nominees might offer a hint, explained Kateryna Odarchenko, managing director of SIC Group USA LLC in Washington, DC. These histories “offer valuable insights into the potential direction of housing and commercial market policies,” she told The Mortgage Note.
Leadership roles in departments such as the Treasury and Housing and Urban Development, as well as regulatory bodies such as the Consumer Financial Protection Bureau “will shape the economic framework for years to come. Understanding the past positions of these appointees — along with insights from leading think tanks — helps us anticipate the administration’s policy priorities and their broader implications,” Odarchenko said.
No matter who is chosen for these roles, their goals and objectives will likely be different than the current administration under President Joe Biden.
Key Role: Secretary of the Treasury
Economist Janet Yellen currently holds this role. She served as the chair of the Federal Reserve from 2014 to 2018.
In June, Yellen announced new efforts by the Treasury Department to increase the supply of affordable housing, outlining a new program designed to provide an additional $100 million over the next three years to support the financing of affordable housing.
Trump is considering Kevin Warsh, a former investment banker and former Federal Reserve governor, for Yellen’s role after a week of bitter infighting about his top two candidates — hedge fund manager Scott Bessent and Cantor Fitzgerald chief executive Howard Lutnick.
In October, Warsh said he believed the Federal Reserve “doesn’t seem to have a serious theory on inflation.” He has also been critical of America’s burgeoning debt.
Trump is also considering Marc Rowan, the billionaire co-founder of Apollo Global Management, an asset management firm that invests in alternative assets. Rowan has voiced concerns that the Fed could overstimulate the economy with interest rate cuts.
Rate cuts by the Fed do not directly impact mortgage rates but do significantly influence them. A decline in rates could be good for commercial real estate unless there is a recession.
Key Role: Secretary of Housing and Urban Development
Adrianne Todman, who has worked in housing for the majority of her career, is the acting secretary of HUD. At the Mortgage Bankers Association’s Annual Convention & Expo last month, she said officials are working to incentivize local governments to reduce barriers to building and adopt new zoning rules allowing innovative housing types like modular housing or 3D-printed houses.
When it comes to who will serve as secretary of HUD under Trump, Ben Carson – who had the role from 2017 to 2021 – is planning to meet with Trump to discuss his upcoming role in the administration. His name was floated for the job of U.S. Surgeon General, but the retired neurosurgeon said he will not be serving in that capacity.
Under Carson, HUD officials worked to make Opportunity Zones in struggling communities successful and there were efforts to remediate dangerous lead paint in housing. But the affordable housing shortage worsened under his watch and home prices surged to new heights.
Bill Pulte, a philanthropist and the grandson of the late William J. Pulte, founder of the home construction and real estate development firm PulteGroup, is also in the running for HUD secretary.
Pulte has appeared on Fox Business Network, discussing the impact of inflation on housing prices. He criticized the housing plan Vice President Kamala Harris proposed during her campaign.
Pulte’s real estate background and philanthropic efforts suggest a likely emphasis on public-private partnerships to address housing challenges. His approach could lean towards leveraging private capital to expand affordable housing, which aligns with Trump’s preference for market-driven solutions. This could introduce new opportunities for developers but might limit expansive federal housing programs, according to Odarchenko.
The direction of the Consumer Financial Protection Bureau is still up in the air.
Bankers hope the CFPB will be more favorable to the industry under Trump’s administration. There have been concerns about overreach by the bureau for years.
Although a new director hasn’t been announced, past Trump-era appointments, like Mick Mulvaney and Kathy Kraninger, focused on deregulation and minimizing the CFPB’s oversight. A similar approach under Trump’s new administration could ease compliance costs for lenders, potentially increasing credit availability, Odarchenko said.
She added that, overall, Trump’s current direction suggests a pro-business, deregulatory approach that could encourage real estate investment and commercial growth. However, in the housing market, “the focus on market solutions might reduce protections for vulnerable consumers.”
Trump’s plans to deport immigrants could backfire when it comes to the construction of new buildings.
One report estimates roughly 30-40% of construction workers are immigrants from South and Central America, Craig Richardson, Truist Distinguished Professor of Economics at Winston-Salem State University in North Carolina, told The Mortgage Note.
“Undocumented workers make up about half of these workers.”
If plans to deport all undocumented workers come to pass, Richardson said, “this will cause a contraction in the labor supply and upward pressure on wages in the construction industry that will inevitably be passed along in higher housing prices.”
Richardson continued by saying that many products used in the manufacturing of homes come from China, including kitchen cabinets, doors, windows, flooring, insulation, hardware, and bathroom fixtures. If these materials are subjected to tariffs, that will be passed along to new home buyers. At the same time, existing home prices will increase as people seek a more affordable alternative to new homes.
Stephon Martin, an attorney and real estate finance professional in Bronx, NY, said that while Trump might be using tariff talk as a negotiation tactic, it will affect the entire U.S. market, not just housing.
“As far as the market’s concerned, the use or the threat of tariffs are functionally the same,” Martin said. “Trump’s activity will cause price raises. This will slow the economy and the Fed will have to lower rates to stimulate it again. Wall Street will be more cautious about trading initially, until a new normal is established at lower rates.”
What will the Federal Reserve do and how will that impact the real estate market?
Odarchenko said with influential Republicans pushing for restained Federal Reserve policies, there could be pressure to keep interest rates low during Trump’s administration.
That could benefit the housing market, but it could also hurt overall inflation control measures, she said.
Robert Shapiro, professor and former chair of the Department of Political Science at Columbia University in New York City, said the Federal Reserve is not beholden to Republicans or Trump when it comes to lowering interest rates.
“Trump would probably want them lowered further, but it will all depend on the next inflation reports and the growth and jobs reports,” Shapiro said.
The Federal Open Market Committee is scheduled to meet next on Dec. 17 and 18. Trump’s inauguration is scheduled for Jan. 20.