Monday Market Report – The Real Estate Market under the Trump Administration

Leading up to election day many people were asking me how I thought the election would
impact real estate.  Obviously no one has a crystal ball, but I had read enough articles from various publications to know that one candidate was expected to elicit more steady results.  It was expected that Hillary Clinton would bring more of the same and thus we could expect the market to continue on the same path.  Donald Trump’s candidacy provided more unknowns and could rock the market as we all saw the stock market do on election night.

 washington-whitehouse-388698-oAs we head into 2017, we know little about what the next president will do in terms of housing because it was largely an ignored topic throughout the election.  Here is a link to the entire Forbes Article in which the National Association of Realtors chief economists explains the potential outcomes and pros/cons.  I encourage anyone interesting in buying or selling in the near future to read this article and peruse my notes below.

The below comments are my interpretation of this information and key take aways if you are thinking of buying or selling in the near future.

 1. “There will no doubt be a short-term stimulus to the economy.”
It is expected that congress and the president-elect will opt for tax cuts and specific government spending that could boost the economy in the first part of 2017.  It is expected that inflation will go higher and that would lead to higher interest rates.  From there it depends on how manageable the growth is and a short term boost will create a larger budget deficit and force rates even higher.

  • Takeaway: Interest Rates will be higher in 2017.  Either somewhat or a lot is the unknown piece of the puzzle.  If you are thinking of waiting until the new year to buy, you may want to get started now before the rates adjust and potentially price you out of the house you want. 

2.  “Changes to Dodd-Frank financial regulation will occur in some form.”
It is thought that lifting some regulation for small banks is a good idea.  They may be able to provide financing for construction which would loosen the housing shortage we are currently experiencing. Dodd-Frank is at its core a consumer protection act.  It is meant to keep large financial institutions from doing whatever they want.  If we see regulation loosening for the large financial institutions, that could be a hint that history will repeat itself.

  • Takeaway:  If this Act is dismantled, consumers will no longer have the same protections in the financial industry.  This includes mortgages, credit cards, and retirement and insurance investments.  A huge change to banking regulations could lead us right back to another taxpayer bailout if banks are left to their own devices.  

3.  “There could be less regulatory land-use and zoning burden for home construction, and thereby lower the cost of building.”
This could make new homes more affordable than existing homes.  This is in general a great thing.  Home affordability is an important thing in a strong real estate market. 

  • Takeaway:  New home construction could become a more affordable option and more available for purchase.  Great news for developers and builders.  If you have a home to sell in an area where new construction makes up your competition, you may want to sell sooner rather than later.

4.  “Fannie Mae and Freddie Mac may not survive.”
If this happens, mortgages will be much more expensive with 30-year fixed rate products disappearing from the market place.

  • Takeaway: This is not good for home ownership and could reduce the pool of people able to buy in a big way.  That might be positive for those with rental properties, but a negative if you need to sell your home.

5.  “Homeowners in flood zones and who suffer through natural disasters may get much less relief from the government.”
It may seem like an easy way to cut the budget to allow for tax cuts.   If this happens, the cost will fall to the homeowner leaving many helpless.

  • Takeaway:  If you live in an area prone to flooding or hurricane damage, you may want to revisit your insurance policies and make sure you’re protected.  And create a plan for this.

6.  “There will be active discussions on tax reform.” 
Congress and the administration could look to trim the mortgage interest deduction, reduce the property tax deduction, and cut of exemptions on capital gains from the sale of a home. 

  • Takeaway: These are some of the major tax advantages for being a homeowner.  If you are planning to sell your home in the near future you may consider sooner rather than later.  If the capital gains exemptions are reduced or eliminated that would have a large impact on your net proceeds at closing!

If you are considering buying or selling, call us today.  Everyone’s life is unique and every market is local.  Let us be your local advisor and see if now is the right time to make a move.  Reach me at 407-494-2820 or Kathryn@ThinkLiveBe.com

*Image credit:  Photo by foxypar4 on Everystock via Creative Commons
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