Donald Trump is now the 47th U.S. president, and there is no denying a sense of optimism and hope. While no one knows exactly what will happen, given the wide range of rhetoric during the campaign, we will focus on what we think will happen and how it will impact home prices, especially our overseas clientele.
Rates & The USD
While it is assumed that The Fed Funds rate will be cut in 2025, mortgage rates are more closely related to the 10-year Treasury pricing, which has been stubbornly high as the market expects more inflation due to continued and possibly increased fiscal deficits.
Fiscal deficit is essentially paying for goods and services with money you don’t have (i.e., printing money). This causes inflation and money debasement.
What makes the U.S. unique is that it benefits from being a reserve currency.
Therefore, higher rates = USD inflows = stronger USD, sucking dollars out of the global money system.
The leading expert on this phenomenon called the “Dollar Milkshake Theory“, is Brent Johnson, Santiago Capital.
We all need a weaker USD!
There is no policy being suggested by Trump that works with a strong USD, so this is important to watch. Ticker DXY is the Dollar Index and we need to see this below 100 soon with clear intention towards 90.
The weaker USD gives more economic flexibility to our trading partners (useful when we are trying to negotiate tariffs) and makes our exports more valuable. That is, a weaker USD is good for global growth, so more of our clients are doing better.
More importantly => Weaker USD gives more flexibility for the 10-year treasury to come down, impacting mortgage rates.
A weaker USD makes U.S. real estate more affordable for our overseas clients through the exchange rate.
Economic Growth and Job Creation
Trump campaigned for pro-business policies aimed at boosting economic growth, such as tax cuts or deregulation, which would increase household income and demand for homes, pushing prices upward.
Moving manufacturing onshore will increase spending on infrastructure, boosting local economies, particularly in regions benefiting from new projects, and driving up home prices in those areas. See CHIPS Act article from last week.
Tax Policies
Trump may advocate for federal tax policies that favor homeowners, such as expanding the mortgage interest deduction, which could make owning a home more attractive and increase demand.
A reduction in capital gains taxes will incentivize more real estate transactions, increasing supply in the market and potentially moderating price growth.
Market Sentiment and Confidence
Trump’s policies and rhetoric could influence consumer and investor confidence. A strong perception of economic stability under his leadership could drive more people into the housing market, increasing demand.
Regional Variations
Areas with strong economies and high-demand housing markets (e.g., Texas and Florida) could see price growth if Trump’s policies favor those regions. These are the markets that we are bullish on and coincide with many of the states which are seeing increased manufacturing.
Contact us today to learn more about how Trump’s policies may impact U.S. home prices for overseas buyers. Schedule a call with one of our loan officers to explore tailored mortgage options and make your investment journey smoother and more informed. We’re here to assist you every step of the way.
- Speak with a U.S. loan specialist 24 hours a day, 7 days a week: +1 845-583-0830
- Schedule a convenient time to speak to one of our U.S. loan specialists
- Visit www.AmericaMortgages.com
