What Are The Trump Administration Effects on Real Estate?

The Trump administration effects on real estate, and the real estate market in general, have been hot topics in 2017. Not quite as hot as real estate market was in the early 2000’s, but the market today is still very strong.  Is the Trump administration to thank? The answer: maybe.

Record Interest Rates

Certainly, the current interest rates have seen record lows and are fueling  home ownership. Within the last couple of years, home buyers were locking in 30-year rates in at the high three percent range, and even lower if you could swing a 15-year term loan. These rates suggested they were buying a new car instead of a new home, and were completely unheard of in previous generations.  But if the economy stays strong, we will certainly see a rise in interest rates, which means a fall in mortgage applications.

Immigration

Another one of the Trump administration effects on real estate concerns skilled labor. If the demand for new homes stays strong, the United States will have to produce a labor force that is up to the task of providing new construction. Many of those positions are currently filled with undocumented immigrants. Of course, probably the biggest hot button issue of the Trump presidency has been immigration.  If mass deportations come to fruition, the Trump administration’s effects on real estate will be seen in two distinct issues:  1) the loss of trained constructions workers who are not immediately replaceable; and 2) a smaller immigrant population, resulting in a vacant market sector of homeowners and homebuyers.

Consumer Confidence

Of course, what is likely the biggest factor in determining future market trends is simply how much money consumers have in their pockets. If Americans pay less in taxes, and the stock market continues its strong, record growth, the Trump administration effects on real estate will include a profound boost in consumer confidence. The housing market will likely be the biggest winner when it comes to strong consumer confidence, especially based on actual, as opposed to perceived, economic strength. Simply put, when it comes to housing, the American mindset is to buy what you can afford (and sometimes more than you can afford).  Low taxes, low interest rates and perceived job security in a strong economy will all factor into positive consumer attitudes towards not only buying new homes, but upgrading existing ones.

For all of these reasons, it isn’t so easy to determine what the Trump administration’s effects on real estate are. Should we thank the administration for the strong real estate market?  Can this current market sustain for the next several years?  The answer to those questions, like many others, is that time will tell.