The following is an excerpt from this article by Thomas Mitchell.
It’s common for the president to use housing as a vehicle to lead economic recovery, and with Trump being a licensed broker, real estate professionals have been keen to see how his policies would affect them.
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 on deregulating the financial market in order to more fully revive it, and that alone could also give a boost to real estate.
In July, the party approved its 2016 platform. That platform includes significant changes to the Consumer Financial Protection Bureau (CFPB), and there has been talk of repealing the Dodd-Frank Act, which imposed regulations on lenders, and replacing it and the CFPB with something else.
Loosening regulation on lending could potentially boost homeownership by making it easier for consumers to obtain loans.
In August, Trump also told a meeting of the National Association of Home Builders, “There’s no industry, other than probably the energy industry, that is more overregulated than the housing industry… Twenty-five percent of costs to build a house are regulations. I think we should get that down to 2 percent.”
If construction is deregulated to some extent, this could mean more affordable homes for consumers.
Last year, a tax plan that Trump shared specifically and explicitly mentioned that he would preserve the mortgage interest deduction.
As noted in Caroline Feeney’s article, Selma Hepp, chief economist at Pacific Union International, said: “The outcome of the election brings something to the equation that nobody likes, and that’s uncertainty. Consumers get wary and businesses get wary, and investors will be pricing the uncertainty into their decisions.
“Additionally, Trump has not offered a plan for the housing market other than rhetoric. In the least, we know his administration does not agree with the current state of the Dodd-Frank reform and will try to change that. But how it all plays out — it’s too early to tell.”
And Russ Cofano, President and General Counsel of eXp World Holding, added: “I am not a housing economist and would not relish that job after the events of yesterday.
“There appears to be a lot of general consumer uncertainty as to what his election will mean, especially from his non-supporters, who believe his policies may cause them economic harm (for example, repeal of the Affordable Care Act).
“I believe a large part of the housing market is influenced by consumer confidence and this may offset the demand caused by continued low rates. Longer term, Trump did not say much directly on housing during his campaign so, hard to tell.
“If he is able to gain the confidence of the global markets based on actions taken in the coming months, I would expect positive things for the housing market.”
At the same time, Trulia’s Ralph McLaughlin made the case in a statement released this morning that uncertainty can actually equal stability: “A rocky road is no fun to tread on, but at least we know where the obstacles lay,” he said. “Uncertainty tends to drives investors towards safe bets, such as U.S. bonds, which pushes down mortgage rates and makes borrowing cheaper.”
So there it is folks…a LOT of speculation; a LOT of what ifs. We have a wild card on our hands. As I am watching the President Elect stack his Cabinet, I wonder where his motivation lays. What are your thoughts? I would love to see them in the comments on our blog (below).