With the victory of Donald Trump and Republicans, have you ever thought how the real estate market going to get impacted? Even though Mr. Trump real estate proposals related policy platform has been vague in spite he is a real estate man. Here below are certain predictions expected to impact on real estate property market under President Trump governance.
These will be the real impacts
- Without any doubt, there will be short-term stimulus prevails in the economy. There will be a likely bit high in the inflation due to faster GDP growth and thus it may lead to diffidently higher interest rates, still it will be manageable. However, the short-term stimulus will create only short term boost and will not sustain. The forthcoming generation will be burdened with more debt.
- In 2017, there will be sure up in the trade deficit. Due to the growing economy, Americans will be permitted to lead a more sophisticated lifestyle with their financial well-being. If imports and exports considerably decline, then history has consistently given away that job cuts and recessions follow.
- There will be excessive gyrations happening in the stock market. Wall Street will have a good time due to less government regulations; still will frown because of restrictive international trade policies. Janet Yellen, the current Federal Reserve leader may be requested to step down and this apparent interruption into what may be viewed as unsettle financial market by the independent institutions. Still due to the uncertain rise in the financial market will seize back corporate investment spending ideas.
- We can expect some form of changes in Dodd-Frank financial regulations. There will be absolutely positive would be the elating of compliance cost levied on small-sized banks. There will be an increase in the home building activity due to the less regulatory burden.
- Nearly 10,000 community and local banks involve in funding land development projects and construction loans. These banks with the less regulatory rules, will offer more loans to houses which is the need of the hour as there exist housing shortage scenario.
There will be changeover from strict mortgage underwriting to normal lending. Credit is still seems to be tight, expecting very high credit scores for mortgages. In recent years, due to the disclosure of random lawsuits on lending institutions by the government, there has been overly-conservative lending was offered. To an extent, Trump Administration will make a scenario of “we will sue you” and thereby the lending companies will cut back and shut off mortgage access to several customers.
There are chances of limited regulatory land-use and zoning burden for construction of homes, and thus there will decline the building cost. In recent dates, compared to the existing home prices, newly constructed abodes prices are much up which is due to additional regulation cost and not necessarily due to the higher input cost.
The most unfortunate is that Fannie Mae and Freddie Mac, the two institutions which involved in making horrendous business decision related to buying subprime mortgages in the past may not be surviving. Fortunately, today with the change in the management of Fannie and Freddie being led by technicians offering a government guarantee on perfectly written mortgages.
Due to which, they have paid back the entire taxpayer bailout money. Further, they are performing well financially sanctioning the minimum mortgage default rates, through which the country’s treasury is gaining more revenue on the backs of conscientious homeowners.
- Community colleges will likely to gain more help as we will be in need of additional workers equipped with trade skills like plumbers, welders, bricklayers, nurse assistants, electricians and x-ray technicians. Few of these workers will be employed in building homes and rising commercial real estate development.
- Homeowners who are situated in the flood zones and natural disasters exposed location may only get less relief from the government. The government’s instinct is that there will less government’s role and thus homeowners have to pay more.
- Even though all risks without any doubt must be priced properly. But the current flood map used for federal insurance coverage is absolutely outdated and may not be useful. More efforts have to be made with respect of updating the flood maps to ensure better risk assessment in the future.
There will be active discussions taking place related to tax reforms with a motive to simplify. There would be changes in the mortgage interest reduction, exemptions cut off on capital gains, property tax deductions which is currently finds to be complicated. Hence, it is recommended that people who are into real estate business and owning properties across the U.S must be on alert regarding any sort of policy discussions. One specific factor of the tax code of importance with President Trump will be related to commercial real estate depreciation.
Let’s hope Mr. Trump can surprise somehow positively and thus provoke the country of “Making the U.S Great Again” and importantly change behaviour and confidence and thus the economy may see a progress. Through which the tax payers may be charged not even an extra penny which reflects the best scenario.