How Donald Trump’s Second Term Could Reshape the Real Estate Industry and Global Markets

One of the major components of Project 2025 is a push for deregulation, particularly in the housing and construction sectors. This could lead to relaxed zoning laws, accelerated permit approvals, and the rollback of environmental restrictions that have historically slowed large-scale real estate developments. Real estate developers may find it easier to initiate new projects, especially in regions under Republican-led governance.

Despite the Federal Reserve’s traditional independence, Trump continues to insist on lower interest rates—echoing his first-term criticisms of the Fed. During his first presidency, he demanded Fed rate cuts, claiming to better understand monetary policy than central bank officials (as reported by Reuters). If the Fed were to yield to Trump’s pressure in his second term:

• Short-Term Boom: Lower rates could spur a commercial and residential lending surge, driving up property prices and development activity.
• Long-Term Risks: Keeping rates artificially low could inflate asset bubbles. When the Fed eventually tightens policy to combat inflation, the subsequent market correction could hit the real estate sector hard.

Compounding these monetary policy dynamics are tariff increases—such as the proposed 25% tariff on steel and aluminum—that could drive up construction costs. Higher material expenses may slow new developments and make commercial and residential projects more expensive, contributing to inflationary pressures that could, paradoxically, nudge the Fed toward raising rates later.

Trump’s second term has been marked by stricter immigration policies, including restricting asylum seekers and deploying National Guard troops to the southern border. Reduced immigration flows may lower demand for rental housing, particularly in urban centers with historically significant immigrant populations. Additionally, ongoing labor shortages in the construction industry could worsen, increasing housing development costs and timelines.

With fewer immigrants entering the workforce, some cities relying on a steady influx of new residents could see reduced demand for affordable housing. This might slightly ease competition in specific rental markets—such as Los Angeles, New York, and Miami—potentially stabilizing or even lowering rents in areas experiencing oversupply.

At the same time, areas facing labor shortages may see projects, including affordable housing developments, delayed or scaled back. Public housing authorities (PHAs), which depend on federal funding and local partnerships, could face additional strain if federal budgets prioritize immigration enforcement or defense spending over housing assistance programs. In addition:

• Potential Funding Cuts: Trump’s administration may redirect or reduce Department of Housing and Urban Development (HUD) budgets, limiting the expansion or maintenance of public housing projects.
• Regulatory Shifts: Deregulatory measures might expedite private-sector-led affordable housing developments, but without robust federal incentives or protections, the net impact on truly low-income housing remains uncertain.
• Innovative Financing: If federal support wanes, Cities and PHAs may turn to alternative funding (e.g., municipal bonds, public-private partnerships) to address affordable housing shortages.

Trump’s commitment to higher tariffs and an “America First” agenda could disrupt supply chains for real estate developers dependent on foreign materials. Tariffs on steel, aluminum, and other construction inputs can significantly increase commercial building and infrastructure costs.

Retail-focused real estate may also feel the pinch if tariffs on consumer goods reduce consumer purchasing power. However, industrial and logistics real estate could benefit as companies relocate or expand U.S.-based manufacturing to avoid tariffs, driving demand for warehousing and distribution centers.

Corporate tax cuts and incentives for domestic manufacturing could prompt companies to move operations to states with favorable tax regimes, such as Texas and Florida. This shift would drive up demand for commercial real estate—office space, industrial parks, logistics facilities—in these states. Meanwhile, higher-tax states like California and New York could see corporate departures and a softening in local commercial real estate markets.

Trump’s foreign policy decisions—including confrontational stances toward China and the European Union—may deter foreign investors from buying U.S. real estate. Chinese, Middle Eastern, and European capital, which has historically flowed into major U.S. markets (New York, San Francisco, Miami), could slow as investors seek less politicized and less tariff-heavy investment climates.

Heightened confrontations—including a potential diplomatic standoff with South Africa over mineral resources—could disrupt global supply chains for construction materials. This uncertainty may lead developers and investors worldwide to adopt a more cautious approach, slowing international real estate transactions.

In Europe, concerns about U.S. negotiations on Ukraine without European involvement could fuel economic uncertainty, potentially affecting residential and commercial real estate markets. Trump’s support for Israel’s Gaza policy may also influence Middle Eastern investment flows into the U.S. real estate sector.

Trump’s re-exit from the Paris Climate Agreement has signaled a potential rollback of federal support for green energy and sustainability initiatives. While this could slow the momentum of LEED-certified and net-zero developments at the federal level, state and local governments—especially in progressive, blue states—will likely maintain or even strengthen their green building regulations and incentives.

Technological advancements in smart city infrastructure might still progress, driven by municipal-level initiatives and private-sector innovation. However, the absence of robust federal backing could limit the speed and scale of such innovations.

Trump’s second term presents opportunities and uncertainties for the real estate sector. While deregulation and potential Fed rate cuts could spur short-term growth, tariff pressures, labor shortages, and geopolitical tensions could offset those gains in the long run.

1. Deregulation vs. Rising Costs: Developers may find building easier but face higher material and labor expenses.
2. Fed Rate Uncertainty: If the Fed yields to Trump’s demands for lower rates, a short-term real estate boom could give way to a longer-term correction if inflation surges.
3. Immigration and Housing Markets: Tighter immigration policies could reduce rental demand in urban centers while exacerbating construction labor shortages.
4. Affordable Housing Pressures: Reduced federal focus on housing support may strain PHAs and shift the onus for affordable housing solutions onto state and local governments.
5. Commercial Real Estate Realignments: Corporate relocations to tax-friendly states may fuel growth in those regions while leaving high-tax states vulnerable to slowdowns.
6. Foreign Investment Hesitation: America-first trade policies and geopolitical tensions could deter overseas buyers, particularly in luxury and commercial segments.
7. Sustainability Persistence: Federal environmental rollbacks may hamper nationwide green building progress, but states and private entities could continue pushing for sustainable development.

Staying informed and agile is essential in a landscape shaped by political influence, evolving monetary policy, and global economic shifts. Real estate investors should closely monitor policy changes, adapt to emerging opportunities, and hedge against inflation risks and potential market corrections. By crafting flexible strategies and leveraging state- or city-level incentives, stakeholders in the real estate industry can better position themselves for both the immediate impacts and the longer-term realignments of Trump’s second term.