Trump vows to cut home prices, but his policies could actually increase them, Redfin warns

While former president Trump has voiced concerns about housing affordability, several of his proposed policies could actually make homes less affordable, according to a new analysis from Redfin.

“Trump acknowledges that housing is too expensive and that he wants to bring down mortgage rates and boost new construction,” wrote Chen Zhao, economic research lead at Redfin.

“But many of the housing and economic policies from his first term, some of which he has mentioned recently in speeches and interviews, would make housing more expensive.”

By Redfin's estimates, many of Trump's proposed policies, including import tariffs, tax cuts, and immigration curbs, would have a direct and indirect negative effect on housing costs.

Redfin dissects Trump's housing impact

The report starts off with Trump's plans to slap substantial tariffs on imports, including a 10% levy on all imports and a 60% tariff on Chinese goods.

Goldman Sachs economists warn these tariffs might increase inflation by 1.1 percentage points, potentially forcing the Federal Reserve to raise interest rates further.

This could make homeownership more challenging, especially for first-time buyers.

Trump's immigration stance also raises concerns. A crackdown on illegal immigration could lead to labor shortages in the construction industry.

"There would be much less labor supply for the construction industry. That means less residential construction, which would put a cap on supply growth and perhaps push up home prices," explains Zhao.

Redfin also examined the potential effects of extending Trump's 2017 tax cuts. While these cuts could benefit some homeowners, they might make homeownership less appealing for others, especially in high-tax states.

The tax changes made it less advantageous for many people to claim deductions for mortgage interest and property taxes, which could cool demand in some housing markets.

However, the tax cuts aren't all bad news for housing.

They include incentives for investing in "opportunity zones"— areas in need of economic development. This could potentially increase the housing supply in these areas, though the full impact isn't yet clear.

Redfin's analysis also points to Trump's tendency to roll back government regulations as a risk factor. During his first term, Trump weakened the Consumer Financial Protection Bureau and advocated for privatizing Fannie Mae and Freddie Mac.

“If Trump adopts a similar stance in his second term, mortgage lending standards could become looser, which would increase demand for housing as homebuyers find it easier to get a mortgage,” wrote Zhao.

“But it would also increase risk in the mortgage system, and to borrowers.”

Housing affordability an issue in swing states

As the election approaches, Redfin likely won't be the only ones putting housing policies under the microscope.

With Americans in key battleground states now spending nearly double on housing compared to the 2020 election, affordable homes could become a make-or-break issue at the ballot box this November.