Trumps Election Good For The Housing Market!

Did Trump’s Election Boost the Housing Market?

Examining Shifts in Consumer Confidence, Mortgage Rates, and Market Dynamics

With Trump's election generating both optimism and debate, there’s a lot to unpack about how this outcome might influence the housing market. Could it actually lead to more affordable homes and increased consumer confidence, or are we still on shaky ground? Let’s dive into how recent economic shifts, rate adjustments, and market sentiment are shaping the real estate landscape.

Bond Market and Interest Rates: How the Market Reacted

Since the election, interest rates have fluctuated significantly. While initial reactions saw rates spike, they quickly settled and even dipped slightly, with current averages around 6.92%. This movement stems from bond market activity rather than just the Federal Reserve’s influence. Historically, mortgage rates closely follow the 10-year Treasury yield, not necessarily the Fed’s fund rate directly.

So, what does this mean for homebuyers? As rates trend downward, albeit slowly, more buyers may re-enter the market, particularly if rates drop further in coming months. Lower rates have often led to increased homebuyer activity, as we saw in Austin, where recent rate drops prompted a surge in pending sales.

Consumer Confidence: A Boost from New Market Sentiment

Consumer confidence has been on the rise, reaching its highest point since early 2022, according to Fannie Mae’s Home Purchase Sentiment Index. In October, 20% of consumers felt it was a good time to buy, while 64% believed it was a good time to sell. This shift indicates that while high home prices remain a hurdle, more sellers might be encouraged to list, potentially balancing supply and demand.

Market Predictions: The Role of Increased Inventory

Entering the new year, we could see more listings as sellers regain confidence. This potential increase in inventory combined with slightly lower rates could bring some relief to buyers. However, high prices and interest rates are still influencing many potential buyers to wait, and elevated prices continue to make homeownership challenging.

In Austin, where inventory has steadily increased, the market reflects both local nuances and the broader national trends. If rates continue to dip, the Austin area could experience a renewed wave of buyer activity.

The Future of Fannie Mae and Freddie Mac: Will Trump Privatize?

With Trump back in office, speculation is growing around the potential privatization of Fannie Mae and Freddie Mac. This shift could attract more private investment into the housing sector, as investors view this as a step toward a more market-driven mortgage system. Fannie Mae’s stock has already seen an uptick, reflecting investor confidence in this potential move. However, a fully privatized Fannie Mae would likely reshape the mortgage market, potentially creating both opportunities and challenges for buyers and lenders.

The $25K Credit Debate: Affordability and Red Tape

During the election, much was said about a proposed $25,000 credit for first-time homebuyers, aimed at helping low- and middle-income families afford homes. While some see this as a direct way to boost affordability, others, like many developers and local officials, argue that reducing red tape would be a more effective strategy.

The City of Austin, for example, faces high development costs due to regulatory barriers, which get passed on to consumers. Many experts believe that encouraging builders by lowering these costs and streamlining permits could help bring down housing prices faster and more sustainably than subsidies alone.

Austin’s Housing Market: What’s Ahead?

The election and resulting economic shifts have certainly stirred the market, but we’re still left with big questions. Will Trump’s administration successfully implement a pro-housing agenda that addresses the nation’s housing supply issues? Could further rate adjustments finally make homeownership more accessible in Austin? And most importantly, will we see the market stabilize in 2024 as both buyers and sellers gain more confidence?

If you’re thinking about buying, selling, or investing, keep an eye on these evolving dynamics. As always, reach out to us for the latest insights and guidance on navigating the Austin real estate market.