It’s created a lot of instability, a lot of uncertainty.”

Ken Rosen, a well-known real estate economist, researcher, and investment manager, opened a presentation on the housing market at a conference this week in Atlanta with a blunt assessment of President Trump's impact on the industry.  

A packed ballroom for the Urban Land Institute’s Housing Opportunity Conference in Atlanta leaned on Rosen’s every word. Rosen is chairman of the Berkeley Haas Fisher Center for Real Estate and Urban Economics; and Professor Emeritus at Berkeley Haas. He is also chairman of Rosen Consulting Group, a real estate market research firm. He has also, as they say, been around the block a few times in a storied career in real estate insight.

Starting with the Department of Government Efficiency, I don’t think I’ve seen anything like this, the instability it has created.”

Adam Ducker, CEO of RCLCO Real Estate Consulting and on stage with Rosen, echoed:

Markets hate uncertainty.”  

Making housing more affordable was one of Trump’s campaign promises.

But policy gambits so far ignited instant and growing concern across a broad spectrum of housing stakeholders. They fear their business will be upended by deep cuts in staffing at agencies focused on housing affordability and market stability, even as measures of the housing affordability crisis reflect worsening – not improving – trends.

The Washington Post reported on Sunday that Housing and Urban Development has come under the DOGE microscope and is looking to reduce the agency’s roughly 8,300 employees to under 4,000. Bloomberg reported last week that the Federal Housing Administration’s workforce could be cut by 40%.

Privatizing Fannie Mae and Freddie Mac is back on the table, an idea the previous Trump administration had considered. Rosen said Fannie and Freddie account for 70% to 80% of housing when needed.  

We've never seen anything like this in my lifetime,” Rosen said.

Rosen, who lives in California, recalled what Elon Musk, Tesla’s CEO, did with Twitter in cutting its workforce. Musk, who is shepherding DOGE, cut 80% of the Twitter workforce, reportedly more than 6,000 people.

They think they can do it with 7 million federal workers,” Rosen said. “It’s a mistake what he’s doing," adding that housing is so critical, “yet there's very little discussion for household policy.”

Influencing Trump

Noting Trump’s pro-housing campaign promise, Ducker posed the question of whether the housing industry and ULI “can kind of bend the arc a little bit around some of that.”

ULI is going to try by giving Trump a five-point plan.

He is a real estate guy, but his real estate is done differently than many in the room have done it,” Rosen said.

A positive could be deregulation, which Trump has broadly supported. Rosen said the biggest problem has been land-use regulations, rent controls, and other regulations that make building more housing difficult. National assistance could help encourage changes.

Inroads have been made at the local and state levels, Rosen said, citing California voters rejecting statewide rent control in a referendum last year. He had joined the opposition to rent control.

Expanding opportunity zones could be another positive that comes out of the Trump administration. They were created in the 2017 Tax Cuts and Jobs Act in low-income areas to allow investors to defer capital gains taxes for years. The deferral period, however, ends in 2026. The zones have benefitted apartment developers and investors.

Where Interest Rates are Headed

We think we still are facing a $2 trillion deficit annually,” Rosen said referring to the budget proposal approved by the House of Representatives on Tuesday. “That means it's going to be very hard for interest rates to come down.”

With an unemployment rate at 4%, the economy is effectively at full employment.

We've never run these types of deficits consistently in a full employment economy,” Rosen said. “It’s a mistake. Trump, remember, is a student of economics. He just doesn't care about it. He likes to borrow.”

Inflation has been tamed to roughly 3%. But Rosen said the question is whether Trump administration policy is inflationary, such as the tariffs.

In one scenario, he sees inflation accelerating because of tariffs and labor shortages. The bearish case is driven by what Rosen described as the chaos in Washington. Still, a bullish scenario is that “Trump gets lucky,” inflation doesn’t rise, and interest rates stay low.

Everyone's still hoping rates are going to come down,” Rosen said. “It's a false hope, because big budget deficits, inflation is endemic. It's not going to be 2%. it's going to be, we think, three to 4%, which means it's very hard to get rates anywhere near as low as they were during the last cycle.”

He said wage inflation is running about 4% a year and construction costs haven’t come down much since they rose nearly 30% during the COVID-19 pandemic. Trump’s immigration policy could hamper residential construction because many of the workers are immigrants.

We have inflation in rents again in two-thirds of the markets and house prices as well,” Rosen said. “So, this idea that housing is going to be deflationary – in a few markets, that's true – but generally it's not true.”