With the 2024 presidential election on the horizon, there is growing anticipation around what a unified government—a scenario where one party controls the White House, Senate, and House—might mean for the economy. If a single party gains full control, it could enable significant policy shifts that address the current economic challenges, from high interest rates and fuel costs to the persistent housing shortage. These changes could create a ripple effect, potentially easing some of the economic burdens Americans face today and, in particular, having a transformative impact on the housing market and mortgage industry. Here, we explore how such an alignment of power could influence housing demand, affordability, and consumer confidence.

1. Economic Policy Shifts to Address High Interest Rates and Housing Costs

In 2024, one of the foremost economic issues facing potential homebuyers is high interest rates, which make mortgage payments less affordable and discourage home buying. With a unified government, there’s a greater chance of implementing economic strategies aimed at lowering interest rates and making homeownership more attainable.

• Interest Rate and Monetary Policy Influence: While the Federal Reserve operates independently, its policies are heavily influenced by the broader economic environment and government strategies. A unified government with clear, coordinated economic policies could affect inflation levels, potentially driving down interest rates if inflation remains controlled. Lower interest rates mean lower mortgage payments, which could renew demand for housing by making it more affordable for a wider range of buyers.
• Tax Reform to Relieve Homeowners: Tax policy is another powerful tool that can impact the housing market. Unified governments may pass reforms that offer relief to homeowners and buyers. For instance, increased tax deductions for mortgage interest or property taxes could incentivize homeownership. Furthermore, changes to capital gains tax on property sales or incentives for first-time buyers could reduce the financial barriers that many potential homeowners currently face, making it easier for them to step into the market.
• Infrastructure Investments to Reduce Commuting Costs: As part of broader economic improvements, a unified government could prioritize infrastructure projects, potentially lowering fuel costs by improving access to public transportation or enhancing urban planning. New infrastructure could also make suburban and rural areas more accessible, potentially easing demand in urban areas and improving affordability. Enhanced infrastructure might lead to greater regional housing demand, especially in commuter-friendly suburbs, balancing housing needs while reducing transportation costs.

2. Boosting Consumer Confidence Through Stability and Targeted Policies

Consumer confidence plays a pivotal role in housing demand, as people tend to invest in homeownership when they feel secure about their economic prospects. A unified government in 2024 might be able to address core concerns—like job security, wage growth, and cost-of-living reductions—that impact household budgets and overall financial security.

• Job Creation and Income Growth: Policies aimed at expanding job opportunities and increasing wages can empower potential buyers, especially younger and first-time buyers. By raising disposable income and promoting job stability, a unified government can make it easier for individuals to consider homeownership as a viable option. Increased earnings could also offset the effects of inflation, which currently impacts housing demand due to higher living costs.
• Reducing Inflation and Fuel Costs: With a clear economic strategy, a unified government could mitigate inflation, which has affected the cost of basic goods and housing materials. A reduction in inflation would directly impact the cost of constructing and maintaining homes, benefiting both homebuyers and developers. Additionally, policies that stabilize or lower fuel prices could ease household budgets and incentivize prospective buyers who are concerned about overall affordability in the current economy.

3. Tackling the Housing Shortage Through Targeted Affordability and Development Policies

The housing shortage remains a significant issue for buyers and renters alike, especially in high-demand urban areas. A unified government could leverage several policy approaches to increase housing supply and make homeownership more accessible.

• Affordable Housing Initiatives: A unified government may have the ability to launch large-scale affordable housing programs aimed at alleviating shortages. These might include tax incentives for developers to build affordable units, subsidies for low-income buyers, or government-backed loans with favorable terms. Programs that specifically address first-time homebuyers or low-income households could drive up demand while making homeownership more achievable.
• Streamlining Housing Development Regulations: Unified governments have more leeway to address regulatory barriers that can hinder housing development. By easing zoning restrictions or offering incentives for developing high-density housing in urban and suburban areas, a unified government could increase the supply of affordable homes. This would help cool the housing market by meeting the demand in high-cost areas, especially where housing shortages are most acute.
• Expanding Mortgage Access and Affordability: Through government-backed mortgage programs like FHA, VA, and USDA loans, a unified government could increase access to affordable loans. Expanded or modified lending policies could help lower-income and first-time buyers qualify for mortgages, making it easier to enter the housing market. Conversely, a government prioritizing stricter lending criteria might limit housing demand among riskier borrowers, balancing supply and demand in an already competitive market.

4. Addressing Regional Variations in Housing Demand and Affordability

Unified government policies won’t affect every region uniformly, as housing needs and market dynamics vary widely across the country. Policies that are sensitive to regional demands could enhance housing accessibility in specific areas without creating an imbalance in less populated regions.

• Urban vs. Suburban and Rural Demand: Infrastructure and affordable housing policies could shift demand by making suburban and rural areas more attractive and accessible. For instance, federal incentives for suburban development could meet the needs of remote workers and those seeking a lower-cost lifestyle outside urban centers. A unified government might prioritize development in under-served suburban areas to spread demand more evenly, easing pressure on high-cost urban markets.
• States with High Housing Demand: In high-demand states like California, New York, and Texas, unified government policies could specifically address the affordability crisis by incentivizing affordable developments or offering state-specific tax breaks. Tailoring policies to regions with extreme affordability issues could reduce market pressure, potentially stabilizing home prices and increasing access for middle- and lower-income buyers.

As the 2024 election approaches, the potential for a unified government brings unique opportunities for addressing the pressing economic challenges Americans face today. With streamlined decision-making, a unified White House, Senate, and House could implement policies to reduce interest rates, improve fuel costs, and alleviate the housing shortage. By focusing on affordability, economic stability, and job growth, a unified government could foster conditions that enhance consumer confidence and make homeownership accessible for more Americans.

Ultimately, the impact of the 2024 election could shape the future of the housing market and mortgage industry. For prospective homebuyers and those within the industry, keeping a close eye on policy changes and their potential ripple effects is essential. Whether this alignment of power will ultimately improve housing demand, interest rates, or affordability depends on the priorities set by a unified government.