How President Trump and his policies may impact homeowners, buyers and sellers
By Erik J. Martin
CTW Features
It’s a new year and a turn of the clock toward a new administration. Which begs the question: What can home buyers, sellers and owners expect from President Trump when it comes to housing matters in 2017 and beyond? That query is currently top of mind for folks inside and outside the industry, especially considering that Mr. Trump made his bones in real estate.
Ask Republicans and they’ll tell you that the housing future looks bright under Trump: based on results of a brand new Trulia poll, this group of voters went from, before the election, having a -9 point margin in favor of purchasing a home in 2017 to, following Trump’s win, a +17 margin (margin meaning percent of respondents saying 2017 will be better than 2016 minus the percent saying worse) – that’s a 26-point swing toward optimism; they’re also bullish on selling a home this year (a 25-point positive swing). Democrats surveyed were more pessimistic: pre-election vs. post-election, Dems went from having a +13-point margin in favor of buying a home in 2017 to a -10 point margin and a +9-point margin to a -11 point margin in favor of getting a mortgage loan in 2017.
Mark Lee Levine, professor of real estate at the University of Denver, believes the Trump administration will have a positive impact on housing because his policies are favorable to businesses and he aims to reduce regulations and decrease tax rates.
“I expect less red tape when it comes to buying and selling homes once Trump’s position on decreased regulations moves forward,” Levine says. “With the Republicans controlling the House and Senate, I think the bottom line outlook for the real estate market is very good for 2017.”
If Trump softens regulations on lenders, it may also lower the costs of compliance, bringing back more small community banks to compete with bigger banks and boosting bank profits – all of which can increase credit availability, says Jeff Taylor, managing partner at Maitland, Fla.-headquartered Digital Risk LLC.
“More credit for builders means they can increase production and housing inventory,” Taylor notes. “And deregulation could reduce costs for builders, making it easier for them to construct affordable housing.”
Pierre Debbas, partner with Romer Debbas, a New York City law firm that represents many lenders, developers and homeowners, is also enthusiastic about Trump having a positive influence, thanks to the potential effect of his tax reform proposals and background as a prolific real estate developer/investor.
“Lowering taxes and maintaining the existing capital gains tax, as he has proposed, will mean additional liquidity, which can only be an advantage to the real estate market,” Debbas says. “Following the election, our market is being inundated with people wanting to close on condominium and office deals all over the city.”
Of course, many of these prospective buyers eager to purchase now are motivated by an undeniable post-Trump victory fact: mortgage interest rates have ticked up since Election Day, thanks to the improved economy, speculative investing, inflationary pressures, the bond market and other factors. Trump’s proposal to spend more on infrastructure may also influence the Federal Reserve Board to approve interest rate increases this year in order to keep inflation under control.
“Many economists are revising their predictions upward for rates in 2017, which could hurt the first-time buyer market hardest by reducing affordability,” Taylor says.
“There’s also concern that Trump’s plans to spend money on infrastructure projects around the country could result in more laborers taking those jobs and leaving homebuilders even more shorthanded – hurting new construction,” Taylor says.
Additionally, Mr. Trump’s tough immigration stance is also likely to keep immigrants out of the country and the workforce—“another blow to homebuilders who rely on immigrants for construction jobs,” Taylor says.
Consider that labor shortages also contribute to rising wages for construction workers, which may, in turn, keep home prices high. If home prices continue to climb concurrent with interest rates rising, home sales could start to plummet under Trump’s watch.
“If you’re in the market for a home loan, I encourage you to act soon,” suggests Carolyn Riegler, a real estate broker/CPA in Bloomfield Hills, Mich., who feels the uncertainty surrounding Trump’s first year could drive interest rates higher. “Rates are still near all-time lows, but it’s unlikely they will move downward.”
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