2017 President North San Diego County Association of Realtors
In a nation in which homeownership is largely seen as synonymous with the American dream, it’s a question that real estate professionals are now asking: How will President Trump impact the U.S. housing market in 2017? Will a Trump presidency launch a sustained upward trend in homeownership rates? Mr. Trump is a real estate tycoon who has made a fortune building luxury condominiums, hotels and casinos. But will that experience enable him to help the middle class, which faces a lack of affordable housing and rising prices?
The surprise election of Donald J. Trump has real estate professionals wondering how a new Washington regime will impact our profession, one way or another. During his campaign, Mr. Trump has said his priorities would be cutting taxes and creating jobs. In addition, Mr. Trump’s tax plan explicitly stated that he would preserve the mortgage interest deduction. If we take him at his word, then the prospects for the housing market are not bad. Today, Americans want to feel secure and believe they have a fair shot in the marketplace. Overall, I believe Donald Trump represents good news for home buyers and sellers.
Mr. Trump has a tremendous opportunity to write a new chapter in housing policy and build a legacy based on achievement and improving prosperity for the working class. If President Trump is successful in launching massive rebuilding programs in inner cities and for aging infrastructure across the country, then the impact could be tremendous for real estate, the building industry and skilled labor.
Meanwhile, industry analysts vary in their predictions on the impact to the real estate profession under a Trump administration with Republicans controlling both chambers of Congress. Mr. Trump made his billions as a real estate developer so he knows well the hurdles of dealing with zoning burdens. We might see fewer regulations for new home construction, thereby lowering the cost of building and increasing homeownership. Simply put, Mr. Trump’s first term will be defined by fulfilling his campaign promises and economic improvement.
Among other crystal-ball predictions:
— If Trump is anything, he is a guy who has built buildings. And, a lack of inventory is widely considered the biggest current drag on the housing market. So, if builders could benefit from lower corporate taxes and deregulation, then the result could be an expansion of existing home inventory. In July of last year, the U.S. Census Bureau announced the homeownership rate in this country had hit its lowest level since the government began measuring the stat in 1965.
— The housing market thrives on optimism. Boosted by a Trump confidence pop, demand may increase and mortgage money may become plentiful as equity-sharing mortgages become more widespread with support from big lenders. If banks make it easier to lend to average Americans and lower the credit scores required to qualify for mortgages, then this could increase the buyer pool and give more people a pillar of the American dream: homeownership. Subsequently, lower mortgage rates also could lead to higher home values. Even if rates slightly increase, factor in Mr. Trump’s promised tax cuts, big spending initiatives and reductions in regulations, then home buyers face higher interest rates still won’t be a huge problem.
— Watch for a move away from stringent mortgage underwriting to more normal lending, as well as reforms to Fannie Mae and Freddie Mac. Indeed, some investors are betting Mr. Trump will move the government-controlled mortgage giants into private hands. The fate of mortgage rates may depend in part on the how much pressure the Trump administration puts on the Federal Reserve.
— Speaking of optimism, a combination of tax cuts and government spending in the form of upgrading nation’s infrastructure and for national defense is certain to provide a boost to the economy. A stronger economy is always good news for real estate professionals. Accompanying gains in consumer confidence also will further move the economy higher. If we are rooting for the economy to improve, then we are hoping that with Mr. Trump’s background as a business entrepreneur and real estate developer will pave the way for more growth and more development, which would be a net beneficial for real estate.
Let’s hope that Mr. Trump can deliver positively as only he can do. “Making America Great Again” could mean significantly improving confidence and behavior leading to a positive economic outlook that would not cost taxpayer an extra penny. Now, that would be a terrific scenario.
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Mike Carunchio, a resident of Escondido, is serving as 2017 president of the North San Diego County Association of Realtors (NSDCAR), a 4,800-member real estate trade group for San Diego-area realtors. NSDCAR operates offices in Vista, Carmel Valley, Carlsbad, Escondido and Fallbrook. For more information on NSDCAR, visit www.NSDCAR.com.