How Donald Trump's economic policies could reshape housing affordability

As President-elect Donald Trump prepares to take the oath of office once again, a combination of cautious optimism and worrisome concern looms over what his policies might mean for housing affordability in the U.S.

For housing advocates for low-income families, the picture looks grim.

Wall Street and real estate industry insiders, on the other hand, see a brighter future with lower energy costs, reduced interest rates and lower taxes.

Dennis Cestra Jr., president of Howard Hanna Real Estate's Pennsylvania market, said he is hoping the Trump administration can address the housing inventory supply crunch with incentives for developers through entitlement reform — government giving owners the right to use land for a specific purpose — and streamlined zoning.

"Streamlining of the zoning process is going to speed development and lessen costs," Cestra said. "That might lead to more affordable housing, which is something we desperately need."

Trump's plan to increase drilling and keep interest rates low could help make home purchases more affordable, according to financial experts.

"The cost of producing homes comes down, as well as the cost of borrowing money to build and buy homes comes down," said Paul Brahim, managing director at Wealth Enhancement Group, Downtown.

But housing advocates worry that mass deportations of undocumented migrant workers could cripple the construction industry; that deregulation could unleash private equity firms to acquire more single-family homes and drive up rents; and that tariffs on imported materials may increase construction costs, making homes more expensive.

Such concerns are grounded in budget proposals from Trump's first term, advocates say, which threatened rental assistance for 250,000 families, raised rents on the poorest households and enforced work requirements on people living in government-sponsored housing.

"Nearly all of the harmful proposals the Trump administration put forward before, we were successful in defeating," said Sara Saadian, senior vice president of public policy and field organizing at the National Low Income Housing Coalition in Washington.

Policy impacts on Pittsburgh

Jackie Smith, a University of Pittsburgh sociology professor who researches housing affordability, said she fears Trump's campaign promises to loosen regulations will empower private equity giants, allowing them to buy more single-family homes.

The University Center for Social and Urban Research at Pitt released a report earlier this year that found corporate landlords have amassed large real estate portfolios across Allegheny County and have nearly tripled their holdings in recent years.

"That has been the main driver of rising housing costs in the city," Smith said.

She also worries that a Trump presidency would bring cuts to social services that support low-income people and fewer federal funds to support affordable housing developments.

"That's going to mean more people are going to be struggling to pay their rent," Smith said. "So, housing insecurity will be more acute in Pittsburgh and elsewhere."

Trump's hardline immigration policies, deregulation agenda and proposed trade tariffs could unleash a ripple effect that drives up home prices and rents, advocates for low-income housing say.

The NLIHC operates as an advocate group for affordable housing for low-income people on the national level. Saadian said the organization anticipates policies from the Trump administration that could have harmful outcomes for low-income people.

"We were on the forefront of opposing those first-term policies and we anticipate more battles on behalf of low-income housing," she said.

A 'pro-business' agenda

Riza Kumazawa, an associate professor at Duquesne University, expressed skepticism about some of the former president's proposed policies, including those related to tariffs and fracking. She says Trump's plan to impose tariffs on U.S. trade partners is at odds with basic economic principles.

"Any economist could have told him that imposing tariffs is not a good idea because it means prices will rise as a result," she said. "This is going to be passed on to consumers."

Those costs could impact the cost of housing construction, she said.

"The tariffs will impact parts that are used to build houses. The first time around (during Trump's first term), the tariffs contributed to a $30,000 to $40,000 increase in the price of homes," Kumazawa said.

Financial industry professionals, however, appreciate Trump's pro-business agenda.

They note that Trump has promised to introduce new tax credits, open up federal land for new housing supply, and reduce regulations that add transaction costs to buying and selling a home.

"Trump has said he will make each of these policy changes," said David Root Jr., CEO of DBR & Co, a Downtown-based wealth management firm. "However, it will take some time to have an effect at the local level."

The 'stickiness' of high mortgage rates

Such policies, though helpful, would still be overshadowed by the primary supply and demand and interest rate factors that influence home prices, Root said.

The 10-year treasury bond rate is a major factor that determines mortgage rates. Fixed mortgage rates are typically around 1% higher than treasury yields to compensate investors for the higher risk of mortgages. However, in 2023 and 2024, the spread between the 10-year treasury and the 30-year fixed rate mortgage mushroomed to 3%.

"This would account for the 'stickiness' of high mortgage rates — definitely a factor in the affordability of homes," Root said.

Beyond immediate price hikes from tariffs, Kumazawa warned about the broader implications of retaliatory tariffs from U.S. trade partners, which could further disrupt the global supply chain and inflate costs for American builders and home buyers.

On the energy front, Kumazawa said Trump's pledges to increase fracking could lower production costs and, in theory, reduce inflation.

But she worries about the cost to the environment and public health.

"The homes might be cheaper if drilling happens" she said. "But it will come with other costs."