Rising Costs, Changing Policies, and What It Means for Homebuyers
As President-elect Donald Trump looks toward his second term, Americans are anxiously awaiting his approach to housing. With more than 30% of consumers’ spending already tied to housing costs, and the housing market in a continued struggle to provide affordable options, what Trump decides to focus on next year could have lasting effects on the economy.
Many are waiting for clarity on how his past policies will evolve and which of his proposals could make their way into law. From tariffs to deportations, some experts fear that the housing sector may face significant hurdles. Let’s take a closer look at what Trump’s administration might mean for housing affordability, including potential challenges like rising building costs, labor shortages, and zoning battles.
Tariffs and Their Toll on Housing Construction
Trump’s proposal to increase tariffs on foreign goods could cause a spike in the cost of building homes. In particular, the former president has frequently talked about a 60% tariff on Chinese imports, with additional tariffs on products from other countries as well. The aim is to bring more manufacturing jobs to the U.S. but at a cost—literally.
Experts worry that these tariffs will drive up the price of construction materials, which have already surged in recent years. Lumber, for example, has been hit hard by previous tariffs on Canadian imports, and prices continue to soar.
- Construction material costs have increased by nearly 40% since February 2020.
- Building costs remain unpredictable, with bids for construction projects now only valid for a few days due to material price fluctuations.
Selma Hepp, the chief economist for CoreLogic, voiced concerns about the ripple effect these tariffs could have on affordable housing. “The overall cost of materials keeps rising, which will make it harder for developers to build homes at prices consumers can afford,” she said.
As higher material costs burden developers, the dream of affordable housing could slip even further out of reach.
Labor Shortages: The Impact of Immigration Policy
Trump’s immigration stance could add another layer of complexity to housing costs. His recent remarks about mass deportations, including using a national emergency declaration to speed up the process, have raised alarm among housing experts. According to Selma Hepp, one major concern is the potential loss of a substantial portion of the construction workforce, much of which comes from immigrant labor.
Approximately 3 million of the 11.9 million people employed in the U.S. construction industry are foreign-born. This labor pool plays a critical role in keeping construction costs down, especially in building new homes. The potential mass deportations could result in labor shortages, further driving up housing prices.
Without enough workers to meet demand, the process of building affordable housing could slow to a crawl.
Zoning Laws: Trump’s Conflicted Stance
Zoning laws have long been a point of contention in the housing debate. In an interview last year, Trump criticized these regulations, arguing that they contribute to rising housing costs. He’s not wrong—zoning restrictions often limit the number of homes that can be built in desirable areas, pushing up prices and limiting access to housing.
However, Trump has also maintained a somewhat contradictory stance. While he claims to support loosening zoning restrictions, his policies often favor NIMBY (Not In My Backyard) sentiments. The former president’s administration rolled back Obama-era regulations that sought to address housing discrimination, which further entrenched zoning barriers in suburban areas.
Experts worry that Trump’s focus on suburban development could prevent more affordable housing from reaching areas where it’s most needed. “You can’t both reduce regulations and advocate for protecting suburban neighborhoods from low-income housing,” explained Sarah Saadian, senior vice president of the National Low Income Housing Coalition.
His stance may push local communities to resist housing projects, especially those aimed at increasing affordable units, leading to more scarcity and higher prices.
The Strain of Homelessness and Mental Health
Homelessness in the U.S. is at an all-time high, and Trump’s response to this crisis may significantly affect housing dynamics. Last year, the number of people without stable housing spiked, a result of pandemic-era policies expiring and the continued lack of affordable housing.
Trump has stated that he believes the homeless should be removed from the streets, advocating for more punitive measures. He has also suggested placing individuals with mental health issues into institutions, a controversial move that has sparked concern among advocates for the homeless.
While his approach to homelessness is still unfolding, experts fear that punitive measures could exacerbate the existing housing crisis without addressing the root causes. With a shortage of affordable housing options, many see this as a harmful approach that doesn’t tackle the systemic issues contributing to the homelessness crisis.
Looking Ahead: What Can We Expect?
With the upcoming Trump administration still taking shape, the full impact of these proposed policies remains uncertain. The combination of tariffs, immigration policies, zoning battles, and a more rigid stance on homelessness could create further barriers to housing affordability.
However, there’s also a possibility that some of these proposals could be scaled back or altered by lawmakers. The situation is fluid, and economists, developers, and housing advocates will continue to monitor Trump’s actions closely to gauge what the future holds.
It’s clear, though, that regardless of political shifts, the housing market remains a critical issue for millions of Americans. The cost of living continues to rise, and until policymakers find common ground, the dream of affordable housing may remain out of reach for many.
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