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Today we wanted to share a few key points from around the web on how Trump’s election could impact the real estate world, giving you a bird's-eye view as to what’s going on and what to expect in the upcoming years.
First off, it’s worth noting that Trump is a real estate man and his business background is a great indicator of what could be in store for the housing market, but It’s too early to know for sure.
“He really hasn’t said much about the housing market,” said Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center.
“It’s just so unclear what type of Republican he is” when it comes to housing.
While his goal is to “Make America Great Again”, Studies have shown over and over that a new administration usually doesn't have much of an effect on the local housing market.
That being said, we wanted to highlight a few key points that we feel COULD affect the real estate market based on what we’ve seen and heard.
1. A Boost to the Economy
A boost to the economy is definitely in order. Short-term stimulus, an increase in consumer confidence and spending, and higher productivity will have a positive impact on the economy and housing market as a whole.
With the Trump administration in effect, homebuyers are becoming optimistic about their own economic prospects–boosting their confidence about the future, which affects their purchasing decisions, such as buying a home. At the same time, Issues in the U.K. are also turning investors away from the E.U. which opens up possibilities of new U.S. and U.K. trade deals which greatly benefits our economy.
“We are already seeing over the last four months an upturn in U.K. buyers looking at New York, Miami and L.A.”
-Peter Wetherell, Real estate CEO
2. Financial Markets Are Volatile
Financial markets were affected right away by Trumps election and as a result investors opted for safety, buying mortgage-backed securities, bonds and safe assets like real estate.
“This election result appears to be creating volatility in financial markets. Volatility tends to attract more investors into real assets, like real estate.”
-Brian Dally, co-founder and CEO of Groundfloor
This market volatility is helping keep mortgage rates low which is great news for anyone looking to refinance their home, however as time goes on we may see more stability.
3. Reduced Regulations Means More Affordable Homes
One of the biggest effects Trump will have on the real estate market is the rolling back of regulations in a few different areas. This is something Trump and the Republican party has been very vocal about.
Trump said that “there’s no industry, other than probably the energy industry, that is more overregulated than the housing industry.” which leads us to believe that a few changes may be coming our way.
Much of Trump’s platform has centered around deregulating the financial market in order to more fully revive it, and that alone could also give a boost to real estate. We can also expect to see significant regulatory changes in banking, construction/building, employer/independent contractor and health-care which will result in savings for many businesses and real estate brokerages which could mean more affordable homes for consumers.
4. Tax Cuts Help Americans Save
Trump’s dedication to “Make America Great Again” includes the creation of jobs (which would create more tax revenue) and a plan to cut taxes and government spending in a few key areas.
“I want to jump start America,” said Trump earlier this year.
A few of Trump's proposed tax cuts include:
- Lower and Fewer Tax Rates
- No More Estate Tax
- Huge Business Tax Cuts
The proposed tax cuts would help Americans save and would create a boost in consumer spending and overall economic growth.
5. Immigration Policy Changes Impact Development
Immigration plays a big part in the labor force for construction at the moment which could slow down development not only from labor changes but investment changes as well.
If Trump tightens immigration policies as outlined in his platform, then the United States could see some softening in markets that rely on overseas investors, who might face additional difficulties or hurdles in purchasing property which would directly impact the real estate market.
6. Upgrade In Infrastructure Encourages Household Formation
Trump’s plan is to upgrade the nation's infrastructure by offering help to community colleges and increasing employment and wages–all of which would have a very positive effect on the real estate industry and the encouragement of household formation.
7. Increased Mortgage Rates
Trump’s election pushed mortgage rates to 4% due to sell-off and bond market which made homes more expensive.
Economists at the Mortgage Bankers Association are now predicting that rates will, "trend higher than we had previously forecast, which will more quickly decrease REFIS." They still predict a strong home purchase loan market, but they say they will have to "assess the impact of policies as they are rolled out with respect to overall growth and housing market implications."
8. More Loans More Homes
Changes to Dodd-Frank financial regulation will lift compliance costs imposed on small banks which have been the source of funding for construction and land development loans. With less regulatory burden small banks can make more loans–boosting home building activity.
9. Real Estate Crowdfunding Is Going Up
Many commercial property developers are now using crowdfunding platforms to raise capital for their projects and investors are now more enthusiastic than ever with Trump's election.
Marty Coyne, CTO of Connected Investors says,
“Trump is legendary for his strategies and challenges in attracting capital to his projects. Because of his background I think he will be favorable to anything that would help real estate investors find capital.”
"we have an entrepreneur in the White House, who’s going to want to foster other entrepreneurs...with his infrastructure projects, more people are going to be trying to do developments"
This will crowd funding growth will create an additional boost in home building activity which will directly impact the real estate market.
While there has been a lot of ups and downs in the market and uncertainty amongst people around the world as to how Trump’s victory would shape and impact the world, it’s still too early to have any clear indication as to what this could mean in the long-run.
Right now things are looking promising for the real estate world,
“The Real Estate market in the U.S. is wonderful with a lot of opportunities which I am sure will not change,” said Farhad Vladi, a German broker and founder of Vladi Private Islands
If we can somehow rebuild, unite and truly “Make America Great Again” as promised by the 45th President Of The United States Of America we will all be smiling and thriving.