Home Prices Hit a Record High — Trump Proposes a Solution

In today's video, I want to bring you up to speed on the housing markets. And this one involves President Trump and the Federal Reserve. So, Jay Powell, Chair of the Fed. Okay, so here's the situation. So, if you didn't know, for the month of June, home prices have reached a new record high. And many people might be confused and say that I thought that the housing market was crashing. Well, to that, I'd say it depends. A lot of it depends on your region. So, according to I.C.E., a mortgage technology firm, home prices are falling in about one-third of the U.S. But another way to look at it is that home prices are not falling, or they're even going up, in two-thirds of the U.S. So, we're seeing home prices drop more notably in Florida and in Texas. But of course, there's going to be exceptions within those states. But home prices are still climbing in the Northeast and in the Midwest. Again, that's generally speaking. But if you look at the national average for the month of June, home prices are up by 1% compared to 12 months ago. So, as predicted, we're not seeing a housing market crash. I know that some people are going to say, well, in my area, home prices are down by 7%. But, you know, I'm not going to deny that. But if that's the case, that just means that home prices are up by 8% somewhere else. So, unfortunately, home prices remain high in the U.S. And combine that with elevated mortgage interest rates, the housing market remains unaffordable. Now, you may see headlines like this. So, take a look. Home sales fall to a nine-month low. So, just to clarify, this does not mean that home prices are plummeting. This just means that there's less activity. Fewer people are buying and selling homes. And I would say that's not really a shocker because when you have home prices at record highs and mortgage interest rates this high, then fewer people can afford to buy a home. And of course, there's going to be less transactions taking place. Now, in this type of environment, we're going to have more people that want to buy a home, but they can't afford to buy a home. So, there's going to be more people just sitting on the sidelines. And we're also going to have more homes that are sitting on the markets. So, here are the number of homes that are available for sale. There's about 1.97 million homes for sale in the U.S. right now. So, that's 7.8% more compared to 12 months ago. So, that's good, you know, to see an increase in the inventory. However, this is still considered very low because pre-pandemic, it was around 2.3 to 2.5 million. Now, if there was a big supply and demand imbalance, like much more sellers than buyers, then we would see home prices plummet. But as you can clearly see, that is not the situation. Now, President Trump is criticizing Jerome Powell, who's the chair of the Federal Reserve. So, President Trump is saying that the Federal Reserve is choking the housing markets by not lowering interest rates. So, President Trump is essentially saying that if the Federal Reserve would lower interest rates, then mortgage interest rates would fall, and then homes would become more affordable, at least on the financing side, and then the real estate market would pick up again. But of course, as you know, Powell has not been cutting interest rates. The Federal Reserve, they're taking a wait-and-see approach, and this is upsetting President Trump. So, here's the situation. This is the newest developments. President Trump is now suggesting a new tax break, where any profits on selling a home would be tax-free. So, the purpose of this would be to encourage people to sell their homes, which would add to the supply of homes for sale. Okay, so there's a few things that I do want to point out. I'll just name three of them. So, the first thing is that President Trump can't just make this happen with an executive order. Like, it's not just up to him. You know, Congress would have to vote on it. And the second thing is that, well, of course, President Trump supports something like this, because he's a real estate guy, along with many of his friends and associates. And the third thing is that profits on a home are already tax-free, up to $250,000 for a single person and $500,000 for married filing jointly. So, Congresswoman Marjorie Taylor Greene introduced the No Tax on Home Sales Act in the If the Federal Reserve would lower rates, we wouldn't even have to do this. But we're thinking about no tax on capital gains on houses. And Congresswoman Greene said, My bill unlocks that equity and helps fix the housing shortage. And the National Association of Realtors says that 29 million Americans would exceed the current $250,000 tax-free amounts if they were to sell their homes. And 8 million Americans that file married filing jointly would surpass the $500,000 tax-free amounts. So, in other words, this bill would impact millions of Americans if it were to pass. But, as mentioned, President Trump says that they wouldn't even have to take these measures if the Federal Reserve would just lower their interest rates. So, this is the mortgage interest rates on the 30-year fixed. And this is coming straight from the Federal Reserve. And this is a 10-year chart. So, as you can see, relatively speaking, it remains high in the upper 6% range. So, close to 7%. So, 6-7. And Mark Zandi, who's a chief economist at Moody's, wrote on X, Now, I want to show you this. So, this is a forecast of where mortgage interest rates are expected to end up by the end of this quarter, Q3. So, end of September. Okay, so right now, we're at 6.8% on the 30-year fixed. So, the average prediction is that we're going to drop slightly to around 6.6%. But, of course, as you can see, that is the average expectation. The National Association of Realtors is predicting 6.4%. And the Mortgage Bankers Association is predicting that we're going to stay flat near 6.8%. But I just want to point out that there is the possibility that the Federal Reserve cuts interest rates, but mortgage interest rates don't drop by a lot or even go up. So, that's because the Federal Reserve has more control over short-term interest rates. So, they have less control over the 10-year interest rate and 30-year interest rates. So, that is under normal circumstances. However, under more dire circumstances, yes, the Federal Reserve, they can buy 10-year and 30-year treasuries to lower long-term interest rates, which would make mortgage interest rates fall. But essentially, what I'm saying is that there's no guarantee that the Federal Reserve lowering interest rates will lead to a big drop in mortgage interest rates. And with Jay Powell as the chair of the Federal Reserve for the next 8 months, during his time as he completes his term, I don't expect him to do anything drastic. But once Trump replaces Powell in the spring of 2026, it's most likely going to be a new Fed chair that's expected to cut interest rates significantly. And extreme measures are definitely going to be on the table. So, for the remainder of 2025, I don't expect much relief on mortgage interest rates. I mean, you saw the chart. It's been range-bound for such a long time. But in 2026, yes, we might see some big changes in the rates for mortgage interest rates. But of course, if they're going to do that, there's also going to be an impact on inflation. So, that's your real estate update for today. Please subscribe. I'll keep you updated on this entire situation. Thank you for the support. I wish you a very nice day. Take care.