City's Co-ops and Condos Shiver in Face of Second Trump Term

As Donald Trump prepares to move back into the White House, New York's co-op and condo residents are faced with the possibility of rising inflation and mortgage rates, higher construction and renovation costs and, on the up side, a reduction of property taxes.

Overall, Brick Underground reports, Trump’s plans for massive deportations, lower taxes, and new tariffs have left real estate industry professionals and New York buyers and sellers uncertain about the housing market’s future.

“It’s a difficult market for consumers to get their arms around,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. "There's still a tremendous amount of uncertainty…even our uncertainty is uncertain.”

But one things appears inevitable. Most economists agree that Trump’s campaign promises to enact mass deportations of undocumented migrants and add tariffs on imported goods would make inflation worse, the Associated Press reports. And higher inflation would make it unlikely that mortgage rates will drop significantly in 2025. Instead, rates could rise further, says Melissa Cohn, regional vice president of William Raveis Mortgage. “Trump's policies on immigration, tariffs, and taxes are all inflationary," she says, "which means that rates go up because mortgage rates trend with the rate of inflation.”

Miller expects mortgage rates to “straddle 6%” next year, a far cry from 3 to 4% levels seen in pre-pandemic years — and a dose of bad news to buyers who hoped this year's interest rate cuts would lead to lower mortgage rates in the near future. With Trump back in the White House, that appears unlikely.

Next is the question of possible changes on taxes. Trump's first administration created a $10,000 ceiling on the formerly unlimited state and local tax (SALT) deduction through the 2017 Tax Cuts and Jobs Act, which took effect the following year. The cap stung especially in such high-income, high-tax blue states as New York and California. Trump’s advisors are reportedly considering doubling the cap on that deduction, though some Republicans are pushing for an even higher limit.

A higher cap could leave some owners with more money to spend on a new apartment, says New York City Comptroller Brad Lander. “If people wind up with more money in their pocket because they're not paying as much federal government in taxes thanks to the SALT cap being raised or eliminated—and if tax rates decline overall—then you might see people who would have more to spend on housing,” Lander says.

And finally there's the uncertainty about the costs of constructing and renovating apartments. Trump’s plan to carry out the “largest deportation operation in American history” will likely slow housing construction, according to a report from Lander. He estimates that there are more than 500,000 undocumented immigrants in the city, with many working in construction and hospitality. The loss of those workers, coupled with tariffs on imported goods, would slow construction of new apartments, including rentals, Lander says.

Higher construction costs could also hamper sales of units that need renovations. Co-op apartments in need of upgrades are already a tough sell to today's buyers who generally prefer renovated units because of how difficult and expensive it is to renovate an apartment. Higher construction costs will make these units even less attractive.

“Those units will struggle,” says Susan Abrams, a broker at Coldwell Banker Warburg. Buyers “understand that if the tariffs go up and we see inflation, the construction [cost] is going to be greater than” expected.

Welcome to Trump II.