It’s inauguration day as I’m writing this. Today we have a new president. Regardless of how you feel about him, the reality is that the housing market will be affected in some way. There have been various predictions here and there but for the Washington DC, Virginia and Maryland area, we are curious to know how this will affect us right here where he lives.
First of all, there will probably be a short-term stimulus to the economy in general. Trump has said that there will be tax cuts, but just about every president says that to some degree. There will also be a limit to government spending in the form of upgrading the nation’s infrastructure for national defense. This inflation will cause a little bit faster growth in the economy and because of this draws will automatically increase which will help lessen the budget deficit. The problem comes when this short-term is exactly that, not a long-term fix. So we will see how much this will impact future generations.
Our trade deficit could rise in 2017. Because of our growing economy, Americans tend to buy foreign items such as wine, game consoles, foreign sports cars or movies. There also may be more trips to out of country places.
One of the biggest changes in real estate could come in the form of the Dodd-Frank financial regulation. Changes are inevitable in some form. This will probably change by listing the compliance costs that are imposed on smaller banks. These local banks and community credit unions have been the source of funding for many construction and land development loans. With fewer regulations, these smaller banks can make more loans and boost home-building activity. This right here is something that is a major shortage.
We also could be moving further away from strict mortgage underwriting laws to more normal lending practices. Credit will still be tight for mortgages and buyers will need a relatively higher score to get approved but were hoping that these lending institutions will lower their restrictions to some degree, however, there has been volatility in the Trump businesses before, which could make some underwriting lenders a little gun shy.
We will probably see fewer regulations on land use and zoning laws for new home construction. This will lower the cost of building adding more homes to low inventory areas. Obama had started this procedure and president Trump will likely carry this through.
And then there’s tax reform. The code is thicker than just about any book in history. There is projected to be some skimming and trimming in the form of mortgage interest deductions, property tax reductions, and cutting exemptions on capital gains tax. Trump IS in real estate, so the implications for buyer and seller should point to positive ones. [Source]
I guess we will see. Whatever the case, this year should be a great year to buy or sell. Ready to do just that? Give us a call anytime.