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The Upcoming Presidential Election and The Real Estate Market

Tue Sep 10, 2024 on Florida Real Estate & News

The Upcoming Presidential Election and The Real Estate Market

Regardless of one’s politics, most people will agree that one of the major issues confronting our country is the housing market.  As we discussed in an earlier blog, high interest rates have precluded not only first-time homebuyers from purchasing but also sellers from listing their homes. Why? The issue of attainable housing arises. With high interest rates, potentially less people are able to obtain a loan, unless they are able to gradually refinance later. There is also the lock-in effect where current homeowners, who have lower mortgage rates than present, are not willing to sell their homes because purchasing a different home would cost more. The 30-year mortgage rate has drifted downward for different reasons, including the economy softening and a decline in the demand for mortgages. Mortgage interest rates will most likely drop even further, as it is anticipated that the Federal Reserve will cut interest rates at their meeting next week, given the upcoming presidential election.

Picture courtesy Kevin-Dietsch Getty-Images

Will the Federal Reserve potential mortgage interest rate cut next week boost the housing market?

Although it is difficult to predict exactly what will be, a likely mortgage rate cut should be a positive step to stimulate the housing market. However, both Presidential candidates will still need to deal with structural housing issues that remain. For one, according to a Redfin report, close to 60% of homeowners have outstanding mortgages that are locked in at rates below 4%. If a homeowner, then, who has a current mortgage rate of 3%, wishes to purchase a different home, their mortgage interest rate would still be at least 2.5 % higher. The lock-in effect, therefore, would still remain.

Further, home prices have risen over 4.5% this year alone. As a result, in order for homeowners to be at the payments they would have had in January 2024, rates would need to drop to 6.09% in order to make the home purchase attainable.

How is the Presidential Election a variable in the housing market?

Picture courtesy GREG LOVETT/THE PALM BEACH POST

Whoever wins the election this November will attempt to implement programs that will affect housing in general. Amongst other things, Vice President  Kamala Harris, for instance, has proposed  providing $25,000.00 in down payment assistance for first-time homebuyers, encouraging construction of three million new housing units, and encouraging local governments to allow for construction. This policy is similar to Florida’s Hometown Heroes program, which launched in 2022 but has had issues keeping up with demand. Former President Donald Trump also has indicated that homeownership is a key issue, proposing a mix of tax incentives and regulatory changes to stimulate the housing market. He has promised to reduce regulations and open areas of federal land for large-scale housing construction. Regardless of either candidate’s specific policies, both will still have to obtain support from the Senate and House of Representatives before such policies are implemented. This, as we all well know, may be challenging.

Whatever candidate’s policies come into fruition; the real estate market will be affected. How? Some economists are concerned that housing policies that may create more demand in a low supply market will boost higher prices. Other issues, therefore, that affect the housing market which both presidential candidates  must address is the labor, including immigration, to construct all of the proposed homes. And, with the increased home building, real estate in general will need to be analyzed as more services and housing will be needed for those who are a part of the building process (including construction workers, architects,  and housing suppliers).

What does this all mean?

Presidential politics and the housing market are interrelated. Whoever becomes the next President will have to address our housing issues, including interest rates, labor, and overall community planning. As the foreclosure crisis exemplified at its worst, real estate is part and parcel (no pun intended!) of not only our community but our overall economy. At least both candidates recognize that housing is a priority in this campaign, and are looking at ways to address the housing issues.

Should you have any questions or need assistance with a residential real estate purchase or sale, our title company, Weston Title & Escrow, Inc. is able to help you and can be reached at 954-384-6168. Should you have any legal questions about a potential purchase or sale or another legal matter, our team at Oppenheim Law can be reached at 954-384-6114.

First published at Oppenheim Law: The Upcoming Presidential Election and The Real Estate Market