In the wake of the 2016 election of Donald J. Trump as the 45th president of the United States, the stock market excelled as investors gained confidence. Stocks have been in the green ever since.

However, housing became more expensive, which has created challenges for real estate agents. That is because when the stock market rallies, the bond market usually sells off, and bond yields rise. Mortgage rates loosely follow the yield on the 10-year Treasury.

CNBC reported that the average rate on the popular 30-year fixed mortgage hovered around 3.5 percent in the fall of 2016. Rates shot up to as high as 4.3 percent immediately after the election, according to Freddie Mac. It stayed above 4 percent for the first half of the year and is currently just below that now.
The jump in mortgage rates, however, didn’t immediately dampen consumer or builder confidence, which are both key to the housing market.

Patrick Hamill, CEO of Denver-based Oakwood Homes, said builders hoped the new administration would deregulate their sector, which hasn’t happened. Now, builders are up in arms over the Trump tax plan, which cuts popular deductions for homeownership.

Patrick Hamill, CEO of Denver-based Oakwood Homes

“We need a national immigration reform bill. We have people that are afraid of being deported so they’ve gone underground. It’s just made housing expensive.”

Home prices continue to climb due to the lack of supply, and that has sidelined both first-time and move-up buyers. Ralph McLaughlin, chief economist at Trulia, a real estate listing site, said affordability is weakening and inventory shrinks.

“The important question here is whether the optimism we saw after last year’s election has manifested itself into the housing market this year. We aren’t seeing signs that’s the case. This softening of many of these indicators isn’t necessarily the result of anything the Trump administration has or hasn’t done, but, rather, we were expecting a possible bump in housing and we haven’t seen that yet, unlike the labor market and unlike the stock market.”

Moreover, the administration’s tax plan now has consumers more worried about the cost of housing and the possibility of losing the tax advantages of homeownership.

Zillow CEO Spencer Rascoff said he believes the tax bill isn’t quite so hard on housing. Instead, he looks to a stronger economy and job growth, if not wage growth.

“That helps housing for sure, but what we need in housing though is more houses. What we would like to see is pro-growth policies that help development, help homebuilders build new homes, help apartment buildings come on line. That’s what really helps housing from here.”

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