As the sun rises on Washington D.C. this January 20, 2025, Donald Trump takes the oath of office for his second term as the 47th President of the United States. Let’s dive into the current market landscape, explore potential policy impacts, and take a look at what the next four years might hold for real estate professionals, investors, and homeowners alike.
Key Takeaways
- Housing Market Recovery: The National Association of Realtors (NAR) projects a 2.5% increase in existing home sales for 2025, reaching 4.13 million units, signaling a gradual market improvement¹.
- Price Growth Moderation: CoreLogic forecasts a 3.5% increase in home pricesthrough 2025, indicating a more sustainable growth pattern².
- Mortgage Rate Outlook: The Mortgage Bankers Association projects mortgage rates to average 6.1% in 2025, a slight decrease from the previous year³.
- Current Mortgage Rates: 7.08% 30 Year Fixed
- Commercial Real Estate Recovery: CBRE forecasts a 7.5% increase in investment sales activity for 2025, with transactions expected to reach approximately $410 billion⁴.
- Deregulation Impact: The National Association of Home Builders estimates that aggressive deregulation could potentially reduce new home costs by up to $93,000⁵.
- Regional Trends: Sunbelt states are expected to continue strong performance, while coastal markets may face challenges and Midwest markets show potential for growth⁶.
Let’s examine key real estate and economic top line numbers over the past 10 presidential inaugurations:
Housing Market Resilience and Recovery
Despite the economic turbulence of recent years, the housing market is showing remarkable resilience and signs of a gradual recovery. According to the latest data from NAR, existing home sales are projected to increase by 2.5% in 2025, reaching 4.13 million units¹.
Lawrence Yun, Chief Economist at NAR, offers some context: “The housing market has demonstrated incredible resilience in the face of economic headwinds. The projected increase in sales for 2025, while modest, signals a potential turning point. However, we’re still navigating a market that’s well below its full potential, largely due to inventory constraints and affordability challenges.”
Price Growth Moderation: A Closer Look
Home prices continue their upward trajectory, albeit at a more moderate pace than we’ve seen in recent years. CoreLogic’s latest Home Price Index (HPI) forecast predicts a 3.5% increase in home prices through 2025².
Dr. Frank Nothaft, Chief Economist at CoreLogic, explains the nuances of this trend: “The slowing pace of price appreciation is actually a positive sign for the market’s overall health. It suggests we’re moving towards a more sustainable growth pattern, which is crucial for long-term market stability. However, it’s important to note that even with this moderation, affordability remains a significant concern in many markets.”
To put this in perspective, let’s look at the median home price trends:
- 2023: $389,800
- 2024: $403,900 (estimated)
- 2025: $418,000 (projected)
This steady climb underscores the ongoing challenge of affordability, especially for first-time buyers entering the market.
Mortgage Rate Outlook: Navigating Uncertain Waters
The mortgage rate landscape continues to be a topic of intense interest and speculation. The Mortgage Bankers Association (MBA) projects mortgage rates to average 6.1% in 2025, a slight decrease from the previous year³.
Mike Fratantoni, Chief Economist at the MBA, offers his insights: “The projected 6.1% average for 2025 reflects a complex interplay of factors, including Federal Reserve policy, inflation expectations, and overall economic growth. While this rate is higher than what we’ve grown accustomed to in recent years, it’s important to view it in a broader historical context. Throughout the 1990s and early 2000s, rates in this range were considered quite favorable.”
Let’s break down the mortgage rate projections:
- 2024 average: 6.5% (estimated)
- 2025 projected average: 6.1%
- Historical context: 30-year fixed rates averaged 8.1% in the 1990s
This data underscores the importance of managing buyer expectations and highlighting the long-term benefits of homeownership, even in a higher-rate environment.
Commercial Real Estate: A Sector in Transition
The commercial real estate sector is poised for a modest yet significant recovery in 2025. CBRE, a leading commercial real estate services and investment firm, forecasts a 7.5% increase in investment sales activity, with transactions expected to reach approximately $410 billion⁴.
Spencer Levy, Global Chief Client Officer and Senior Economic Advisor at CBRE, provides context for these numbers: “The projected increase in investment sales activity is a positive indicator of growing confidence in the commercial real estate market. However, it’s crucial to understand that this recovery is not uniform across all sectors. We’re seeing particular strength in industrial and multifamily properties, while the office sector continues to face challenges in the wake of evolving work patterns.”
Let’s break down the commercial real estate outlook by sector:
- Industrial: Continued strong performance, driven by e-commerce growth and supply chain reconfiguration.
- Multifamily: Robust demand, particularly in suburban and secondary markets.
- Retail: Mixed outlook, with neighborhood centers and experiential retail showing resilience.
- Office: Ongoing challenges, with a flight to quality driving demand for Class A properties.
- Hospitality: Gradual recovery, with leisure travel leading the way.
Craig Meyer, President of JLL’s Industrial Leasing group in the Americas, highlights a particularly bright spot: “The industrial sector has been a standout performer, with a record total of roughly a billion square feet of industrial space absorbed in 2022 and 2023. We expect this trend to continue, driven by the ongoing e-commerce boom and the need for more robust and localized supply chains.”⁷
Trump’s Real Estate Agenda: A Comprehensive Analysis of Potential Game Changers
As President Trump begins his second term, several key policy initiatives are expected to significantly impact the real estate landscape. Let’s delve deeper into these potential game-changers:
1. Deregulation Drive: Cutting Costs and Red Tape
The Trump administration’s focus on cutting red tape in the construction and development sectors could have far-reaching implications for the housing market. Industry estimates suggest that aggressive deregulation could potentially reduce new home costs by up to $93,000⁵.
Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), explains the potential impact: “Regulatory costs have been a significant factor in driving up home prices. The administration’s deregulation efforts could lead to more efficient approval processes, reduced compliance costs, and ultimately, more affordable housing options. However, it’s crucial to strike a balance between streamlining regulations and maintaining necessary safety and environmental standards.”
Key areas targeted for deregulation include:
- Streamlining environmental review processes
- Simplifying zoning laws
- Reducing building code complexity
- Expediting permit approvals
While the potential for cost savings is significant, critics argue that overzealous deregulation could lead to safety concerns and environmental issues. The real estate industry will need to navigate these changes carefully, balancing the benefits of reduced costs with the need for responsible development practices.
2. Federal Land Utilization: Unlocking New Development Opportunities
The administration’s plans to open up federal land for home construction could provide a significant boost to housing supply, particularly in Western states where federal land ownership is extensive. The Bipartisan Policy Center has highlighted this as a potential solution to housing shortages⁸.
Mark Zandi, Chief Economist at Moody’s Analytics, offers his perspective: “Opening federal lands for development could be a game-changer in addressing housing supply shortages, especially in land-constrained markets. However, the success of this initiative will depend on careful planning to ensure environmental preservation and infrastructure development keep pace with new housing.”
Potential impacts of this policy include:
- Increased land availability in supply-constrained markets
- Opportunities for large-scale master-planned communities
- Potential for more affordable housing options in high-cost areas
- Challenges in infrastructure development and environmental conservation
The real estate industry should closely monitor the implementation of this policy, as it could create significant opportunities for developers and investors, particularly in the Western United States.
3. Opportunity Zones 2.0: Revitalizing Distressed Areas
A potential revival and expansion of the Opportunity Zones program could drive substantial investment into economically distressed areas. The Economic Innovation Group has been tracking the impact of this initiative⁹.
John Chang, Senior Vice President and Director of Research Services at Marcus & Millichap, comments on the potential impact: “An expanded Opportunity Zones program could be a catalyst for urban renewal and economic development in struggling areas. We’ve already seen significant investment flow into these zones, and a revamped program could accelerate this trend, creating opportunities for both real estate investors and local communities.”
Key aspects of a potential Opportunity Zones 2.0 program likely to include:
- Extended tax benefits for investors
- Expanded geographic coverage
- Enhanced reporting requirements to ensure community benefits
- Integration with other economic development initiatives
Real estate professionals should stay informed about the evolution of this program, as it could create significant investment opportunities in previously overlooked markets.
4. Immigration Policy Impact: Labor Market Implications
Proposed immigration policies could have significant implications for the construction industry, potentially exacerbating existing labor shortages. The Pew Research Center has been studying these trends¹⁰.
Ed Brady, President and CEO of the Home Builders Institute, weighs in on this issue: “The construction industry has been grappling with labor shortages for years, and any policy that further restricts the labor pool could exacerbate this problem. On the other hand, if the administration couples immigration restrictions with programs to train domestic workers in construction trades, we could see a shift in the labor market dynamics.”
Potential impacts of immigration policy changes:
- Increased labor costs in the construction sector
- Delays in project completions due to workforce shortages
- Potential rise in modular and prefab construction methods
- Opportunities for vocational training and workforce development programs
The real estate industry will need to adapt to these potential labor market shifts, possibly by investing in training programs, embracing new construction technologies, or exploring alternative labor sources.
Regional Market Insights: A Diverse Landscape
As we look ahead to the next four years, it’s crucial to recognize that real estate markets across the country will likely respond differently to economic and policy changes. Let’s examine some regional trends and projections:
Sunbelt Surge
The Sunbelt region, encompassing states like Florida, Texas, and Arizona, is expected to continue its strong performance in the coming years. Factors driving this trend include:
- Favorable tax policies
- Lower cost of living compared to coastal markets
- Strong job growth in sectors like technology and healthcare
John Burns, CEO of John Burns Real Estate Consulting, notes: “We’re seeing a continued migration to Sunbelt states, driven by both retirees and young professionals seeking affordability and quality of life. Cities like Austin, Phoenix, and Tampa are likely to see above-average price appreciation and development activity.”⁶
Coastal Market Recalibration
Expensive coastal markets, particularly in California and the Northeast, may face challenges as remote work trends persist and affordability concerns drive outmigration. However, these markets still possess strong fundamentals that could support long-term growth.
Selma Hepp, Chief Economist at CoreLogic, explains: “While we’re seeing some softening in high-cost coastal markets, it’s important to remember that these areas still have strong economic drivers and limited supply. We may see a period of adjustment, but the long-term outlook for these markets remains positive, especially if affordability improves.”¹¹
Midwest Renaissance
Several Midwest markets are positioned for growth, benefiting from relatively affordable housing stock and revitalized urban cores. Cities like Columbus, Indianapolis, and Detroit are attracting attention from both homebuyers and investors.
Ralph McLaughlin, Chief Economist at Haus, shares his insights: “The Midwest offers a compelling value proposition for both residents and businesses. As remote work becomes more prevalent, we’re seeing increased interest in these markets from buyers seeking more space and a lower cost of living.”¹²
Closing Thoughts: Building on Shifting Sands
As we move forward, it will be more important than ever for real estate professionals to stay informed, adaptable, and proactive. The ability to anticipate market shifts, understand policy implications, and leverage emerging technologies will be key differentiators in this new era of real estate.
Stay tuned to the Daily Dose of Real Estate for ongoing coverage and analysis as we navigate these exciting times together. Remember, in the ever-changing world of real estate, knowledge is not just power – it’s the foundation upon which we’ll build the future of our industry and our communities.
Here’s to the next four years of challenges, opportunities, and growth in American real estate. May we approach it with wisdom, innovation, and a commitment to creating value for all stakeholders in the housing market.
Notes:
- National Association of Realtors (NAR) Housing Forecast: https://www.nar.realtor/newsroom/existing-home-sales-increased-0-8-in-february-2024
- CoreLogic Home Price Index (HPI) Forecast: https://www.corelogic.com/intelligence/u-s-home-price-insights/
- Mortgage Bankers Association (MBA) Mortgage Finance Forecast: https://www.mba.org/news-and-research/forecasts-and-commentary
- CBRE 2025 U.S. Real Estate Market Outlook: https://www.cbre.com/insights/books/2025-us-real-estate-market-outlook
- National Association of Home Builders (NAHB) Regulatory Costs Study: https://www.nahb.org/news-and-economics/housing-economics/special-studies/2021/regulatory-costs
- John Burns Real Estate Consulting Market Reports: https://www.realestateconsulting.com/our-company/research/market-reports/
- JLL Industrial Outlook: https://www.us.jll.com/en/trends-and-insights/research/industrial-market-outlook
- Bipartisan Policy Center Housing Report: https://bipartisanpolicy.org/report/housing-americas-future-new-directions-for-national-policy/
- Economic Innovation Group Opportunity Zones Report: https://eig.org/opportunityzones/
- Pew Research Center Immigration Report: https://www.pewresearch.org/topic/immigration-migration/
- CoreLogic Market Pulse: https://www.corelogic.com/intelligence/market-pulse/
- Haus Market Reports: https://www.haus.com/reports
- NAR Research Reports: https://www.nar.realtor/research-and-statistics
- MBA Newslink: https://newslink.mba.org/
- Federal Reserve Economic Data (FRED):Median Sales Price of Houses Sold: https://fred.stlouisfed.org/series/MSPUS30-Year Fixed Rate Mortgage Average: https://fred.stlouisfed.org/series/MORTGAGE30USReal Median Household Income in the United States: https://fred.stlouisfed.org/series/MEHOINUSA672NFederal Debt: Total Public Debt: https://fred.stlouisfed.org/series