What the Trump presidency could mean for real estate
Any time a new president enters into office, many industries around the country (and indeed the world) can be affected based on the policies and direction that the new administration takes. With Donald Trump winning this year, many industries are looking to figure out what his presidency will mean.
The real estate industry is no different. Many are pondering what, if any, changes will be ushered in with the new administration.
In short, and not to bury the lead, no one knows. Real estate industry researchers and insiders are pointing to a few key points to be mindful of regarding Trump's past businesses and indicators of the real estate industry. Below is a compilation of those questions & thoughts.
Will Trump use real estate to kickstart the economy?*
Trump has used real estate himself as an investment, and although he hasn’t said much about his housing platform, what he has said indicates that he’s interested in boosting homeownership.
Much of Trump’s platform has centered around deregulating the financial market in order to more fully revive it, and that alone could also give a boost to real estate.
What will happen to mortgage rates?*
Many different factors affect mortgage rates — they change each day based on what the market is doing — and we saw volatility in the market last week since the outcome of the election was not foreseen.(As you know, Clinton was expected to win.)
You may recall a similar affect after Brexit, with markets dropping after the unexpected vote to leave the European Union. A few months later, though, it’s business as usual again.
The international economy also has an effect on the exchange rate, and there could be some disturbance as the result of an unforeseen event.
“Mortgage rates are falling because investors are seeing safe yields in U.S. mortgage backed securities, reflecting their confidence in the relative safety of the U.S. housing market,” wrote Trulia chief economist Ralph McLaughlin last week in a statement. “Furthermore, the Fed is likely to delay a December rate hike because of global economic turmoil. Both effects mean short term win for borrowers, and we’ll likely see an increase in mortgage refinancing if rates continue to plummet." Translation: it's a great time to buy one of our homes. 😉 (A point to note, interest rates have increased in the past few days. Check with us anytime you are interested in the latest numbers.)
Could it become easier to borrow money?*
One way that a Trump presidency could make it easier for consumers to own homes would be to lower premiums for FHA loans or cutting guarantee fees for Fannie Mae or Freddie Mac.
Neither of those have been specifically mentioned as priorities for his campaign, though.
It's all about Jobs
The real estate industry historically rises and falls with jobs. The more Americans are working and are optimistic about their working prospects, the more they will buy & sell homes. As less people work or become fearful about their ability to work, the less they are willing to buy & sell. The volume of buyers & sellers drive the market.
GDP is a great job forecaster
As the country's Gross Domestic Product (GDP), which is what we as a country make and sell to ourselves & around the world, increases jobs typically follow. Right now our GDP is growing 2.9%. GDP growth between 1%-3% is considered rather anemic, 3%-5% is consider healthy and over 5% is great (we'll not talk about 1% and less...). Trump has claimed his plans will take the country to 5%-6% GDP growth. We all hope this comes to pass.
So, all this is to say that it's unclear what the market will do and what factors will go into strengthening or weakening the real estate market. The Williams Team is here regardless of the market conditions. Moreover, we study the market very closely and will be able to help you navigate it when you, your friends & family are ready to make a move and achieve your goal of selling for more money in less time!