Introduction

In a surprising take that could reshape the narrative of young voters, Glenn Kelman, the CEO of Redfin, suggested that many young individuals voted for Donald Trump in the recent elections out of sheer frustration with living in their parents’ basements. In his note titled, "Way-Too-Early Take: What Trump’s Re-Election Could Mean for Housing," Kelman posited that these millennials are looking for a champion to address the housing crisis. He stated, “The young voters who swung right in this election will expect President Trump to act as America’s real estate developer in chief and build the housing they need.”

Impact of the Pandemic on Housing

This observation comes after a turbulent election cycle, marked by President Joe Biden's exit from the race and Kamala Harris stepping in as the Democratic candidate. The consequences of the pandemic have deeply influenced the housing market, leading to skyrocketing home prices and an inundation of young buyers who feel economically restrained.

Economic Factors at Play

The COVID-19 pandemic reshaped our living landscape—remote work surged, home prices surged, and mortgage rates plunged to unprecedented lows. Yet, the economic shift also brought on inflation, prompting the Federal Reserve to hike interest rates again, consequently raising mortgage costs. As a result, potential homebuyers are stuck in limbo: many cannot afford homes, while current homeowners are reluctant to sell and lose their favorable mortgage rates, leading to a significant decline in sales.

Trump's Potential Solutions

Kelman believes that Trump could potentially remedy the housing shortage by easing regulations that inhibit construction. The Redfin CEO mentioned restrictions on building in already developed areas and limitations on apartment buildings in residential neighborhoods as critical hurdles. While federal intervention can be complex, local and state governments hold the reins on land-use regulations, and Trump could incentivize these regions to prioritize housing development.

Demand Surges Post-Election

Demand for housing saw a substantial uptick following Trump's electoral victory, with Redfin reporting that requests for their services from prospective buyers jumped by 25% compared to last year—marking the most significant year-over-year increase in two years. Kelman noted, “Some buyers are undoubtedly enthusiastic about a Trump economy; others may have been waiting to make major decisions until after the election.”

Challenges Ahead

While this surge is noteworthy, it is tempered by an increase in mortgage rates in anticipation of Trump's presidency, a phenomenon referred to as the “Trump trade.” Economists have cautioned that rising tariffs and associated consumer prices may further stifle the housing market.

Historical Perspective on Home Prices

Amid these challenges, one factor remains consistent: home prices almost never decline. Historically, only two significant downturns have been recorded: the brief recession in the early 90s and the Great Financial Crisis of the early 2000s. Currently, with a severe shortage of homes and many young buyers anchored to low-rate mortgages, the prices are likely to persist, potentially escalating even further despite efforts to address inflation.

Conclusion

So, as the housing market navigates these tumultuous waters, will Trump emerge as a real estate savior for young homebuyers, or will they continue to remain trapped in their parents' basements? The answer remains to be seen, but the stakes couldn't be higher for America's next generation of homeowners.