Donald Trump’s surprising Election win has consumers and market analysts alike bracing for dramatic changes in the real estate industry in 2017. Speculation and uncertainty abound on how the real estate market will be affected by Trump’s victory and Republican control of both chambers of Congress.
Before the Election, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, stated only election turmoil” could force the Fed to hold back on an interest-rate hike in December. To date, the market has seen healthy increases in value this year, owing largely to interest rates, lower gas prices, stronger wage growth and improved job market. Now, a Trump win has created a different, unforeseen set of conditions. Conventional wisdom holds that fears of a recession could grow with likelihood that Trump would cut government spending dramatically in his first year, and stock-market uncertainty increasing over just how his presidency will begin. Inflation will likely see an up tick from a faster GDP growth and that will lead to modestly higher interest rates. Consequently, another year of low interest rates may very well be in the cards.
In recent years, newly constructed home prices have been much higher than existing home prices. In 2017, there could be less regulatory land-use and zoning burden for home construction, thereby lowering the cost of building.
There is also speculation that a Trump presidency will be positive for the housing and mortgage markets in the long term. Trump has signaled that he may be committed to bringing regulatory relief — and regulatory certainty — to the financial-services industry, which should make more credit more available to average home buyers who have been locked out of the market by today’s extraordinarily tight credit standards. If this holds true, home purchases should remain strong in 2017, which is good news for a market starved of inventory. This has been a seller’s market for several years and a Trump win will negatively affect the market for those looking to sell,” said Nancy Dennis, a vice president at American Financing Corp., an Aurora, Colo.–based mortgage lender.
Ultimately, an improved lending environment stokes investor and consumer confidence and bodes well for the entire industry.
Endnote: How Trump’s Presidency Could Impact Real Estate