Trump, Musk and the future of the housing market

The recent announcement that Donald Trump is hiring Elon Musk to co-lead a government efficiency initiative has sparked widespread discussion about its potential impact on industries across the board, including real estate. Lawrence Yun, chief economist for the National Association of Realtors, has spoken out about Musk’s focus on cutting government spending and its potential impact on mortgage rates.

Will Musk’s efficiency measure lower mortgage rates?

According to Yun, cutting government spending could lower the federal deficit, which could potentially impact mortgage rates. However, Shallis warns that the reality may be more complex:

“While reducing government spending is a promising initiative, economic stimulus often leads to inflation, which in turn increases interest rates. The Federal Reserve will need to strike a delicate balance to effectively manage these dynamics.”

Borrowers’ misconceptions about Fed rate cuts

Shallis also addresses a common misconception among borrowers:

“Over the past few weeks, I have received several calls from customers asking, ‘Why didn’t mortgage rates fall when the Fed cut rates?’ The truth is that mortgage rates respond to market forecasts and long-term investor sentiment, not just Fed actions. When unexpected rate cuts occur, they can create uncertainty, causing interest rates to rise as investors hedge against the unknown.”

Call to action for buyers: lock in your price now

For buyers, Shallis emphasizes the importance of acting now:

“By locking in your price today you can protect yourself from paying too much for the same property in the future as rates fluctuate. With inventory critically low (one home for every three to four buyers), demand will only increase as rates eventually fall. Now is the time to take action.”

Real estate as an inefficient market: a hidden opportunity

Shallis explains that the slower pace of real estate compared to the stock market creates opportunities:

“It takes 60 to 90 days for economic changes to impact real estate sales. Months can pass from the time a home is put on the market to the time the sales price is announced. That’s why experienced professionals focus on current sales, which provide a forward-looking indicator of market trends.”

A Jersey Shore lesson in market awareness

“As a kid on the Jersey Shore, I learned a valuable lesson about recognizing what’s coming. My mother and I saw storm clouds forming on the horizon, packed up and headed to a restaurant before the rain hit. Others, meanwhile, stayed on the beach until the rain came down on them.

The same principle applies in the real estate sector: experienced professionals identify changes in the market before they are clearly visible, allowing clients to make informed decisions before the crowd.”

For real estate agents: Inform and empower your customers

Shallis encourages brokers to take an active role in guiding their clients:

“Real estate agents need to help buyers understand the benefits of acting now. The combination of limited inventory, rate fluctuations and market inefficiencies creates unique opportunities. By educating clients and working with a team of skilled professionals, you can build trust and ensure successful transactions.”

Qualify your real estate team

“Working with the right team is critical for buyers and borrowers. In medicine, you wouldn’t let a general practitioner operate on your heart. Why would you trust one of the largest real estate investments of your life to an average real estate agent? Ask your broker about their experience, market knowledge and ability to work with mortgage professionals and advisors.”

Looking ahead: Musk, policy and housing supply

While addressing the federal deficit is important, Shallis believes the real focus should be on increasing housing supply:

“Streamlining construction timelines, which currently average 24 to 36 months, would have a much greater impact on the market. Faster inventory growth would reduce competition, create affordable housing and stabilize prices.”

Final thought: Now is the time to act

“The good news is that the inefficiency of the real estate market creates incredible opportunities for those who act strategically. With supplies tight, rates fluctuating and demand poised to soar, buyers who buckle down now and work with skilled professionals will achieve the best results.”

Sean Shallis is a bestselling author, top producing Loan Officer and founder of the Realty Coach App.

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

To contact the editor responsible for this piece: [email protected].