Join host Tracey Velt on this week’s episode of the RealTrending podcast as she sits down with Lead Analyst Logan Mohtashami from HousingWire to delve into his 2025 housing market forecast, interest rates, the potential impacts of Donald Trump’s tariffs, and the looming threat of a trade war.
This interview has been condensed for brevity and clarity. Mohtashami kicks off the conversation by discussing the possibility of mortgage rate declines in 2025.
Mohtashami: When it comes to mortgage rates, I keep a close eye on the 10-year Treasury yield. Mortgage rates are expected to range between 5.75% to 7.25%. The favorable conditions that supported the housing market this year are likely to persist into the next.
If economic indicators and the job market show signs of weakness, the 10-year yield could decrease, leading to improved mortgage spreads and ultimately lower rates. This double effect could result in mortgage rates dipping into the low 6% range, stimulating demand.
Velt: Trump’s push for higher tariffs to incentivize companies to relocate to the U.S. – how might this impact mortgage rates?
Mohtashami: I don’t foresee Trump initiating a full-fledged trade war. In 2016, he made similar statements but didn’t follow through with a “trade war tap dance.” His approach is calculated, aimed at fostering an environment conducive to bringing companies back to the U.S.
Velt: How does Trump’s economic policy intersect with the housing market?
Mohtashami: President Trump’s goal is to lower the dollar and interest rates. The current strength of the dollar hampers U.S. exports. Therefore, lower rates would benefit the nation’s economy.
The choice of the next Federal Reserve chairman will be crucial. If Trump appoints someone who advocates for lower rates, the impact of trade war tariffs could be mitigated. Trump may extend tax cuts to create a more favorable environment for reducing rates and the dollar’s strength.
Given the current state of elevated rates and sluggish housing starts, the market cannot sustain higher rates. Trump aims to prevent job losses in the construction sector by ensuring a steady flow of housing supply, which is essential in combating inflation.
Velt: What can real estate professionals anticipate in the housing market for 2025?
Mohtashami: Agents must prepare their clients for rapid market changes. Economic conditions can shift swiftly, especially in terms of interest rates. It’s crucial for agents to keep their clients well-informed and ready to act promptly.
To conclude, Mohtashami emphasizes the importance of monitoring economic data, highlighting the potential for growth in the housing market in 2025 despite prevailing challenges.
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