Across Southern California, and much of the country for that matter, housing remains unaffordable for many people, whether they’re looking to buy a home or rent an apartment.
Voter concerns about the cost of living, including housing, appear to have played a major role in Donald Trump’s return to the White House.
Now, can he fix it?
During his campaign, the former president promised to lower mortgage rates, cut costly red tape, open federal land to development and deport millions of people in the country illegally, but his campaign promised He argued that opening up housing to people would reduce costs.
Interviews with economists and other housing experts paint a complicated picture of how everything will play out, with some warning that some of President Trump’s policies could make a bad situation worse Some do, while others warn that it may help.
“It depends on what President Trump does,” said Darryl Fairweather, chief economist at real estate brokerage Redfin.
One of the big questions is mortgage interest rates.
Although the president does not set borrowing costs, policies his administration enacts can affect loan prices.
When it comes to mortgages, interest rates are heavily influenced by inflation expectations. A widening federal deficit could also put upward pressure on interest rates.
Supply chain issues caused by the pandemic, coupled with pandemic economic stimulus measures under Presidents Trump and Biden, have been blamed for contributing to the recent spike in inflation, but cost increases have since slowed. It has settled down to a more normal level.
It is unclear whether this slowing trend will continue.
A Wall Street Journal pre-election poll found that most economists believe inflation and interest rates would be higher under Mr. Trump’s policies than those of Vice President Kamala Harris.
In particular, economists say the sweeping tariff and tax cut plans announced by the former and soon-to-be-reelected president could reignite inflation, significantly increase the budget deficit and put upward pressure on mortgage costs. I am doing it.
“There’s obviously a risk,” Fairweather said.
Ed Pinto, co-director of the right-wing American Enterprise Institute’s Housing Center, said such concerns may not come true.
He said he believes the tariffs are primarily a negotiating tactic, noting that President Trump has offered other proposals that could lower mortgage rates by reducing inflation and the budget deficit. These include lowering energy costs by expanding fossil fuel production and appointing the world’s richest man, Elon Musk, to cut government spending.
Another big factor in housing is supply. Economists tend to highlight lack of supply as the main cause of rising rents and house prices.
President Trump has called for cutting regulations that make construction more difficult, but many of those regulations remain in the jurisdiction of local governments, leaving the federal government with limited options to change course, Fairweather said. Ta.
The former president has also called for new housing to be built on federal land, and Pinto said the federal government owns vast tracts of land in Utah and Nevada, where people fleeing California are driving up prices. He said housing affordability in western states such as the state could improve.
Pinto said there is likely plenty of land within the Golden State for the federal government to build on.
“This would be huge for the western third of the country,” Pinto said.
Others are more skeptical. In a report last week from banking giant UBS, analysts wrote that “federal land initiatives may be challenged by the lack of existing infrastructure in these generally rural areas.”
Immigration is also a wild card. President Trump has promised to carry out the largest illegal deportation this country has ever seen.
There are an estimated 11 million illegal immigrants in the United States as of 2022, and mass deportations could tear apart families of different status and shock parts of the economy.
Richard Greene, director of the Rusk Center for Real Estate at the University of Southern California, said that if President Trump succeeds in enforcing mass deportations, housing costs will drop in places like Los Angeles, where hundreds of thousands of people have been evicted and homes are left vacant. He said it could go down.
At the same time, Green noted that deportation could increase rents and home prices because many undocumented immigrants work on construction sites to build housing needed to improve affordability.
There is evidence that this has happened before. A recent paper by researchers at the University of Utah and the University of Wisconsin found that increased immigration enforcement led to less housing construction and higher home prices.
For now, Southern California’s condominium and rental markets both appear to be slowing, but are still too expensive for most.
Rent prices in Los Angeles County fell 1.7% last month from a year ago, but rose 7.5% from October 2019, according to Apartment List. Home prices across Southern California have fallen for three straight months, but remain near all-time highs, according to Zillow.
It’s hard to know what will happen next. According to Green, why? “It’s hard to say what Trump’s policies will actually be.”
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