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Trump Policies Could Send Housing Prices Soaring

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  Published in House and Home on Wednesday, January 21st 2026 at 23:30 GMT by Time
      Locale: UNITED STATES

The Housing Market on a Trajectory for Higher Prices?

The most immediate and visible concern revolves around the housing market. Already grappling with affordability issues, a potential resurgence of Trump's policies could send prices soaring. A key aspect of this concern centers around lending standards. During his previous term, there were hints of a desire to ease restrictions on mortgage approvals, potentially allowing individuals with less-than-stellar credit to qualify for loans. While full deregulation didn't materialize, the mere prospect of a shift towards looser lending practices is enough to trigger market anticipation.

Mark Zandi, chief economist at Moody's Analytics, has voiced significant apprehension. He cautions that a relaxation of lending standards, as seemingly minor as it might appear, would inevitably fuel increased demand for housing. This surge in demand, without a corresponding increase in housing supply, directly translates to upward pressure on prices. The fear isn't just about a price increase; it's about the potential creation of another housing bubble - a scenario that could have devastating consequences for the economy and individual homeowners.

Beyond the direct impact of lending standards, other potential policies could also contribute to price inflation. Reduced investment in affordable housing initiatives, tax policies favoring high-income earners (who are more likely to purchase homes), and a general pro-development stance - all hallmarks of previous Trump-era proposals - could collectively push the market further towards unaffordability for the average American.

Wall Street Braces for a Regulatory Reset

The financial implications extend far beyond the housing sector. Wall Street is bracing for a possible rollback of the Dodd-Frank Act, the landmark legislation enacted in 2010 to prevent a repeat of the 2008 financial crisis. Trump has consistently criticized Dodd-Frank, viewing it as an unnecessary burden on businesses and a hindrance to economic growth.

A dismantling, or even a significant weakening, of Dodd-Frank could lead to increased risk-taking by financial institutions. While some banks might see immediate boosts to their profitability due to reduced compliance costs and increased lending flexibility, the broader financial system could become more vulnerable to instability. The act's regulations, while often criticized for their complexity, were designed to mitigate systemic risk and protect consumers.

Robert Wolf, former UBS executive, emphasized Trump's longstanding commitment to deregulation. He believes the incoming administration would likely prioritize reducing regulatory burdens, viewing them as detrimental to economic growth and business competitiveness. This sentiment reflects a broader ideological perspective that favors minimal government intervention in the economy.

Navigating the Uncertainty: What Homebuyers and Investors Should Consider

The potential for significant policy shifts creates a climate of uncertainty for both homebuyers and investors. While predicting the future is impossible, understanding the potential implications of a second Trump term is crucial for making informed financial decisions. For prospective homebuyers, a period of heightened caution might be warranted. Exploring alternative financing options, carefully assessing affordability, and potentially delaying purchases until the market stabilizes could be prudent strategies.

Investors should closely monitor regulatory developments and assess the potential impact on their portfolios. Diversification remains a vital risk management tool, and being prepared for increased market volatility is essential. The possibility of a return to deregulation creates both opportunities and risks, and a proactive, informed approach is key to navigating this evolving landscape. The coming months will be crucial in shaping the economic direction of the nation, and the financial community is keenly watching for signs of what's to come.