In This Article
After watching George Gammon’s video discussing President Trump’s recent housing executive order, I felt motivated to take his macroeconomic insights and contemplate them specifically for real estate investing using self-directed IRAs. While George’s focus is on broader economic implications, here we’ll explore how those same developments could influence self-directed investing—particularly in the real estate sector.
President Donald J. Trump’s executive order aims to make housing more affordable by reducing regulatory burdens, expanding supply, and encouraging private-sector involvement. For investors using self-directed IRAs—with features such as checkbook control and the ability to invest in a broad array of asset classes—this policy shift could present new opportunities to diversify into real estate.
Understanding the Impact of Regulations on Housing Prices
Government regulations have long influenced the cost of developing residential and multifamily properties. The National Association of Home Builders (NAHB) estimates that, as of 2021, regulations account for nearly 23.8% of the final price of a new single-family home—adding an average of $93,870 to the cost. In the multifamily sector, the burden is even greater, with the National Multifamily Housing Council (NMHC) reporting that regulatory costs contribute 40.6% to total development expenses as of 2022.
For investors, these numbers highlight how high compliance costs may create both challenges and opportunities. If regulatory barriers are lowered, investors using self-directed IRAs may gain access to more competitively priced real estate.
Applying a Warren Buffett-Inspired Lens to Housing Valuations
George Gammon raised an important question in his video: Are housing prices becoming detached from underlying economic fundamentals?
To explore this, we can borrow from Warren Buffett’s famous valuation approach—often referred to as the Buffett Indicator—which compares total market capitalization to GDP to gauge whether a market is overvalued.
Let’s apply a similar logic to the housing market by comparing total U.S. housing market value to GDP over time:
*2025 figures are projected.
When housing values exceed GDP by a significant margin—as seen in 2006, and potentially in 2025—it may signal overvaluation. For self-directed IRA investors, these indicators could be useful in identifying areas of risk and opportunity within the real estate market.
Could a Market Correction Be Ahead?
While no one can predict the future, elevated housing values relative to GDP may point to potential corrections, especially if affordability becomes unsustainable. Some contributing factors include:
Regulatory cost pressures: Excessive fees and zoning restrictions drive up prices.
Supply constraints: A limited number of new homes creates upward pressure on values.
Macroeconomic risks: As values climb beyond income and GDP growth, corrections become more likely.
Investors with self-directed IRAs, particularly those utilizing checkbook control, may want to monitor these trends closely. With flexible access to real estate and private offerings, these investors could strategically position their IRAs ahead of potential market shifts.
You might also like
Highlights of President Trump’s Executive Order on Housing
President Trump’s executive order aims to address affordability by:
Reducing regulatory burdens
Streamlining permitting processes
Revisiting zoning laws
Eliminating redundant rules that increase development costs
Increasing housing supply
Offering tax incentives and grants for developers
Supporting new construction in underserved markets
Optimizing land use
Promoting higher-density and mixed-use development
Encouraging innovation in housing design and layout
Encouraging public-private collaboration
Removing roadblocks to partnerships between government and developers
Leveraging private capital to meet public housing goals
These proposed changes could potentially improve the economics of real estate investing and create new avenues for tax-advantaged retirement strategies.
What This Could Mean for Self-Directed IRA Investors
For those investing in real estate through a self-directed IRA, the changing regulatory and economic environment may unlock new possibilities:
Access to more affordable properties: A potential increase in housing inventory may create pricing opportunities in specific markets.
Improved investment margins: Lower development and compliance costs could enhance overall return on investment (ROI).
Portfolio diversification: With the ability to invest in single-family rentals, multifamily units, or even land development, investors can build a broader real estate portfolio within their IRAs.
As always, investors are encouraged to perform due diligence, consult with legal and tax professionals, and understand the rules and responsibilities of using a self-directed IRA.
Final Thoughts: Strategy Over Speculation
George Gammon’s video presents a view of how macroeconomic forces and government policy may converge to reshape the housing market. While it’s impossible to predict the future with certainty, self-directed IRA investors may benefit by analyzing long-term trends and preparing for shifts in affordability and valuation.
President Trump’s executive order could signal a new chapter in the real estate landscape. For those who invest through self-directed IRAs, it’s an important time to stay informed, evaluate opportunities, and proceed with caution and clarity.
James P. Schlimmer is SVP, Real Estate Growth Officer, at Equity Trust Company.
BiggerPockets/PassivePockets, George Gammons, and sources used for this article are not affiliated in any way with Equity Trust Company or any of Equity’s family of companies. Opinions or ideas expressed by BiggerPockets/PassivePockets, George Gammons, or any sources are not necessarily those of Equity Trust Company, nor do they reflect their views or endorsement. As a directed custodian, Equity Trust Company is not a fiduciary and does not endorse, recommend, or opine on suitability of any specific asset class or investment. The information provided is for educational purposes only, with the understanding that neither Equity Trust Company nor its affiliates, representatives, or officers provide financial planning, tax, legal, or investing advice. Examples provided are for illustrative purposes only. Investing involves risk, including possible loss of principal. Questions related to your specific planning tax, legal, or investment needs should be directed to an attorney or financial professional. Equity Trust and Bigger Pockets/Passive Pockets may receive referral fees for any services performed as a result of being referred opportunities.
-1024x768.jpg "Red Snapper Used as Cudgel by Fed Judge")
