With so much happening in our country and around the world, those of us in real estate are tempted to ask the question, how does this affect the real estate market? One area of particular interests is one you will not go a day without hearing about from now until November: The presidential election. Regardless of which candidate gets elected, there are some potential changes to the market, directly as a result of new policy changes from whichever candidate gets elected, let’s dive into some of these.
There are various topics related to real estate that both sides of the presidential election have expressed interest in correcting or focusing on. One such area is housing affordability. No matter how you dice it, we can all come to the same conclusion that we need more housing in this country. Candidates have thrown out several ideas for correcting this, including implementing rent caps (a limit on how much landlords can increase rent), assistance to families looking for affordable housing, and tax incentives for investors and developers willing and able to build/produce more affordable housing. The effectiveness of these strategies is up for debates between candidates, but no matter how we get there, the bottom line is this: We need more housing.
Other areas of focus that could affect real estate are the potential tax changes we talked about earlier to incentivize developers to build, as well as potential changes in costs of construction/material. Again, it is too early to tell if costs will go down, up, or which way exactly, but it’s also possible that we see changes in regulations regarding construction, zoning, and environmental policies, depending on who gets elected.
There’s also an obvious focus on improving the economy and stimulating it for growth. Proposals include but are not limited to dropping interest rates, but there are many mixed opinions of whether or not this will solve the problem. My personal opinion on this is lowering interest rates on its own may not solve the problem of having more affordable housing. However I think lowering rates in tandem with increased housing production could reduce competition in the real estate market, therefore driving down prices. Again this is just my opinion.
So much of this is just speculation, and it is important to remember that elections are a time of much uncertainty, therefore this tends to create volatility in the market. Volatility makes investors/developers more apprehensive about starting new projects and investing in new deals. I do believe that cohesion with the people producing housing (investors, builders, and developers) and strong policy change to incentivize this could improve the housing crisis and real estate market altogether. It’s hard to say right now but we will keep you updated on things as we start to get more information. Thanks for reading!