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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 20 January 2025 C O V E R S T O R Y to save money for a down payment, will continue to be challenged by housing market conditions. This is due to the rapid increase in prices in 2021 and 2022 and to inflation in other parts of the economy, including the rental market. Renters in single-family properties saw an average of 32% rent increase from 2020 to 2024, and while rent increases slowed in the latter part of 2024, they did not decrease in most of the country. Add to that price increases for other necessities and saving for a home would need to be put on the back burner for many households. Another group that will be chal- lenged in the predicted market con- ditions are current owners on a fixed income. Homeowners' insurance premi- ums have surged over the last few years, and while estimates of the increase range some, the average is about 30% to 50% since 2019, and as much as 90%+ in areas with higher exposure to natural disasters. Unfortunately, as a result, some homeowners who were counting on relatively fixed homeownership expenses (excluding property taxes) over a 30-year period could be facing a payment shock they cannot afford (pre- suming they mortgaged a home with the 30-year fixed rate mortgage). This shock has been more significant in markets where insurance costs have surged. Q: Do you expect demand for rental properties to rise or fall in 2025, and how might this affect housing developers' strat- egies? Demand for rental properties should remain strong in 2025, especially as the nation's young adults form households. There are roughly 30 million 24- to 30-year-olds in the Unted States, and those forming households will most likely become renters, adding to rental demand. In addition, a limited supply of for-sale housing has kept many renters in their rentals. Jacob Channel Senior Economist, LendingTree Q: What economic policies or changes likely to be pro- posed or introduced by the Trump administration in 2025 will have the most significant impact on the housing market, and why? Based on what Trump has said about his policies on the campaign trail and since becoming President-elect, tax cuts, deregulation, tariffs, and mass deportations seem like they would probably have the biggest impact on the broader housing market. Tax cuts and deregulation are likely to be met with open arms by many in the mortgage/housing space. After all, if you owe Uncle Sam less money and have fewer hoops to jump through to do business, that hypothetically leaves you more money for investments and expansion. That said, history has shown, time and time again, that wanton dereg- ulation usually does more harm than good. The last time the United States ne- glected to regulate its mortgage industry, we ended up with the largest financial crisis since the Great Depression. Lower taxes are nice, in concept, until you start to consider that they could drive both inflation and government deficits high- er—two things that will likely result in increased interest rates. Not to mention, an underfunded federal government is going to have a much harder time intervening and stabilizing the economy should things go bad. Tariffs will push prices for some of the goods used in home construction higher. My sense is that the broader home construction industry isn't super worried about tariffs, but in an environment where housing costs are already as high as they are, I doubt consumers are going to be thrilled about any extra costs born of tariffs—even if some of those extra costs are for optional additions to their homes. Mass deportations, on the other hand, are something that everyone should be "First-time buyers, particularly young buyers, or those who haven't been able to save money for a down payment, will continue to be challenged by housing market conditions." —Molly Boesel, Principal Economist, CoreLogic