Expect the Unexpected: Anticipating Volatility in the Housing Market
webadmin • November 8, 2024
Expect the Unexpected: Anticipating Volatility in the Housing Market
As we look toward the next presidential term, a recurring theme is emerging for homeowners and homebuyers alike: expect the unexpected.
From anticipated shifts in federal policies to market reactions, the housing market is likely to experience volatility in the coming months. Let’s explore what to watch for in this dynamic environment and how homeowners and potential buyers can prepare.
From anticipated shifts in federal policies to market reactions, the housing market is likely to experience volatility in the coming months. Let’s explore what to watch for in this dynamic environment and how homeowners and potential buyers can prepare.
What to Expect After the Election
Historically, home sales have shown resilience after presidential elections, often bouncing back despite the initial jitters that come with a change in administration. After all, the housing market is fundamentally driven by demand, interest rates, and supply—factors that are often only tangentially affected by political changes. However, in the wake of this particular election, with a “red sweep” across the government, there may be significant shifts in housing policies that could either stabilize or further stir the market.
Housing affordability remains a top concern for many Americans, yet experts question whether recent proposals will truly address the underlying issues. Ken Johnson, a finance professor and real estate economist, notes, “Both Republicans and Democrats have introduced proposals that sound good on paper, but unfortunately, they haven’t done enough to address the housing shortage over the last decade.”
Most economists agree that the core issue driving the affordability crisis is a severe housing shortage, with an estimated gap of 2.5 to 7.2 million homes over the past decade. This shortfall has been exacerbated by both geographic limitations and regulatory barriers that have constrained housing development in high-demand areas.
While Trump’s plan to reduce regulations for homebuilders could yield some modest gains, other proposals—like large tariffs and mass deportations—could inadvertently worsen supply issues. Economists caution that these measures might introduce new challenges for the housing market rather than providing solutions. A more comprehensive approach is likely needed to address the root causes of the housing crisis, such as affordability and availability.
While these steps aim to bring inflation under control, short-term increases may still impact affordability, especially as new initiatives like tariffs and immigration policies influence prices.
Additionally, the administration’s stance on controlling immigration is positioned as a solution to reduce housing demand pressures. However, only time will tell if these measures will substantially lower home prices or merely add complexity to the market.
Anticipating Market Volatility
With the recent change in administration, analysts expect some early turbulence in the housing market. Already, President Trump’s return has driven up the 10-year Treasury yield, which in turn pushed the 30-year fixed mortgage rate above 7%—a significant increase from earlier this year. This jump underscores the sensitivity of the housing market to shifts in government leadership, especially when new policies affect inflation, interest rates, and economic stability.Housing affordability remains a top concern for many Americans, yet experts question whether recent proposals will truly address the underlying issues. Ken Johnson, a finance professor and real estate economist, notes, “Both Republicans and Democrats have introduced proposals that sound good on paper, but unfortunately, they haven’t done enough to address the housing shortage over the last decade.”
Most economists agree that the core issue driving the affordability crisis is a severe housing shortage, with an estimated gap of 2.5 to 7.2 million homes over the past decade. This shortfall has been exacerbated by both geographic limitations and regulatory barriers that have constrained housing development in high-demand areas.
While Trump’s plan to reduce regulations for homebuilders could yield some modest gains, other proposals—like large tariffs and mass deportations—could inadvertently worsen supply issues. Economists caution that these measures might introduce new challenges for the housing market rather than providing solutions. A more comprehensive approach is likely needed to address the root causes of the housing crisis, such as affordability and availability.
Key Factors to Watch in the Months Ahead
1. Federal Reserve Meetings
The Federal Reserve plays a major role in shaping the housing market by adjusting interest rates to combat inflation or stimulate growth. Following the recent election, many analysts are closely watching the Fed's next moves. Should inflation remain stubbornly high, the Fed may keep interest rates elevated for longer, which would continue to influence mortgage rates and overall affordability.2. Policy Impacts on Inflation
High inflation has been a major factor in the recent rise of mortgage rates, and President Trump’s administration has hinted at multiple strategies to combat it, from deregulation to tax incentives. However, balancing economic growth with inflation control is a delicate process, and homeowners will likely see some level of volatility as these policies take shape.While these steps aim to bring inflation under control, short-term increases may still impact affordability, especially as new initiatives like tariffs and immigration policies influence prices.
3. Supply and Demand Shifts
President Trump’s administration has indicated a strong interest in expanding housing by opening limited areas of federal land for development. This approach could improve the supply of homes for first-time buyers, although it’s unclear how quickly these policies would take effect.Additionally, the administration’s stance on controlling immigration is positioned as a solution to reduce housing demand pressures. However, only time will tell if these measures will substantially lower home prices or merely add complexity to the market.
Preparing for the Future
With so many moving pieces, it’s vital to stay informed and plan accordingly. Mortgage rates, housing policies, and affordability are all subject to change, and understanding these factors will be key to making informed decisions. At Luminate Home Loans, we’re here to provide guidance through the ups and downs of the market. Our team of experts can help you navigate these uncertain times, from finding the right loan options to offering insights on what new policies could mean for your homeownership goals.While we may not know exactly what’s coming next, preparing for potential volatility can help you make smart, sustainable choices. If you’re considering buying a home or exploring refinancing options, reach out to us at Luminate Home Loans. We’re here to support you every step of the way in your journey to homeownership—whatever the future holds.
Here at Luminate Home Loans, we’re always looking for ways to offer more value to our clients and partners. That’s why we’re thrilled to announce that we’re now a wholly owned subsidiary of Luminate Bank®—and soon, we’ll officially transition under the Luminate Bank® name.
For years, homebuyers have been hoping for a return to the ultra-low mortgage rates seen during the pandemic. But as we move through 2025, it’s becoming increasingly clear that today’s rates—hovering between 6% and 8%—aren’t going anywhere.
Luminate Bank® Welcomes Josh Eifert as Chief Financial Officer, Honoring Legacy of Dave Turk [Minneapolis, Minn.] – [2/4/2025] – Luminate Bank® is proud to announce the appointment of Josh Eifert as its new Chief Financial Officer, succeeding Dave Turk, who has played a pivotal role in shaping the company's strong financial foundation. Josh brings a wealth of experience and strategic vision to Luminate Bank, with 26 years in the banking industry. Most recently, Josh served as CFO at Tradition Capital Bank in Edina, Minnesota, where he led the financial strategy during its remarkable growth from $300 million to more than $2.5 billion in total assets. Before his tenure as CFO, Josh contributed to Tradition Capital Bank in other key financial roles. He began his career with Norwest and Wells Fargo Banks, gaining extensive expertise in financial and operational capacities. Luminate Bank's leadership transition reflects the company's thoughtful succession planning, ensuring its financial strategies remain robust and forward focused. Under the leadership of Dave Turk, Luminate Bank has built an exceptional financial infrastructure, delivering consistent results and creating a foundation that positions the company for continued success. Luminate Bank's CEO, Marc Campbell, shared his confidence in the appointment: "Josh not only brings exceptional financial acumen and strategic insight to Luminate Bank, but he also embodies the principles that define our organization: integrity, innovation, and a steadfast commitment to excellence," Luminate Bank's CEO, Marc Campbell, shared with confidence. "His leadership will ensure our financial strategies succeed and inspire confidence across all who depend on us." "I am honored to join Luminate Bank at such an exciting time. The company's remarkable history of financial excellence and its forward-thinking approach align perfectly with my values and vision," stated Josh Eifert. "I look forward to collaborating with the talented leadership team to build on this strong foundation and drive continued success for our customers, employees, and stakeholders." Josh graduated from the University of Minnesota with a degree in finance and completed the Graduate School of Banking at Colorado. CEO Marc Campbell expressed gratitude for retiring CFO Dave Turk's contributions, saying, "Dave has been instrumental in positioning Luminate as a financial leader. His dedication, insight, and stewardship will always be a part of our company's legacy." Josh Eifert will officially assume his role on February 18, 2025. About Luminate Bank® At Luminate Bank, We Open Doors—empowering individuals and families to achieve their financial dreams through personalized service and innovative digital solutions. As a nationwide bank headquartered in Minneapolis, Minnesota, we are committed to helping our clients meet their financial goals with a blend of modern technology, traditional values, and the trusted guidance of experienced professionals. Known for our exceptional commitment to customers, we take pride in delivering a seamless, supportive experience for every step of the journey. Our dedicated mortgage division has branches and a team of loan originators across the US, making expert home financing solutions accessible to communities nationwide. Luminate Bank is committed to safeguarding your money and accounts with FDIC insurance coverage up to applicable limits. Learn more about how we can open doors for you at www.luminate.bank , follow us on Instagram, LinkedIn, and Facebook, or call (952) 939-7200. For media inquiries, please contact: Debbie Schwake, CMO debbie.schwake@luminate.bank
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