Ramping Up Real Estate: Post-Election Projections

Written By: Jacquelyn Annete García Vadnais

2020 has undoubtedly been a challenging and unpredictable year for all sectors of the economy. Given the Covid-19 pandemic, there have been many closures causing certain companies and industries to remain unpredictable. In addition to the Covid-19 pandemic, there is another factor at play in the United States and it is one of the most difficult Presidential elections in generations. Many investors in diverse industries are trying to calculate how the Presidential election’s outcome will have an impact on their portfolios. This is particularly true for real estate investors given the many factors that are impacting the real estate market with no clear end in sight due to the severity of the pandemic. For real estate investors that are trying to make difficult decisions during both the Covid-19 pandemic and the Presidential election, it is wise to consider the factors below:

Most Important Areas to Watch Both During and After the Presidential Election

Here are some of the most important areas to watch in the real estate market in order to see how the Presidential election may affect the U.S. housing market:

Uncertainty May Make it More Difficult to Sell Your Home

The Covid-19 pandemic has caused a great deal of uncertainty amongst both buyers and sellers due to how difficult it is to see when the Covid-19 pandemic may finally end. In addition, the Presidential election has many buyers and sellers nervous that will perhaps want to remain in their current home before buying another or deciding to sell. Given how intense the Presidential election is, buyers are unsure of who may be in office next year, which is another reason to delay selling or buying a new property until more factors are certain.

Real Estate Tax Rates May Shift

The upcoming Presidential election has put many issues into the spotlight that may spook prospective real estate investors. One particular issue is how real estate taxes may shift with a new administration and how large-scale real estate investors with rental tenants in place will adjust. Real estate taxation changes may also be impacted for those that are inheriting property as well. The overall potential shift may have real estate buyers and sellers waiting to see how the Presidential election turns out before making major decisions regarding their properties.

Policies Towards Real Estate May Shift with a New Administration

The U.S. Presidential Election has been very polarized this year. There have been objectives from the Democratic party to find more creative solutions to encourage first-time homebuyers and affordable housing options across the country. The Republican party has been attempting to privatize Fannie Mae and Freddie Mac. In addition, the Affirmatively Furthering Fair Housing Rule that was designed to encourage more affordable housing has ended. This most likely benefits wealthier towns and suburbs by keeping their property values higher. Depending on how the Presidential election turns out, the policies that will be coming will potentially favor low-income and minority buyers with more objectives at low-income housing or the status quo may be maintained. The impact of the Presidential election and the policies that come from either side may have an impact on property values in both the short and long-term.

Home Appreciation May Slow Down

Home appreciation is another factor to consider during a Presidential election year. Home appreciation tends to slow down during an election year which can be a great benefit to potential buyers and less appealing to potential sellers. Due to the other factors at play in the current U.S. housing market from the Covid-19 pandemic, it is difficult to predict how this will impact consumer behavior. Some sellers may hold onto their properties to wait for more appreciation while some buyers may be searching even more closely for their next real estate deal.

Consumer Confidence Factor

A very important factor to consider for prospective real estate purchasers is their confidence in the national economy. For many consumers the health of the U.S. economy is closely tied to the housing market. Currently, there are many factors that are potentially diminishing a consumer’s confidence in the economy due to the Covid-19 pandemic, Congress’ stalled talks on a comprehensive large stimulus plan, stock market volatility, and the heated Presidential election. Given the many uncertainties, more conservative buyers and sellers will likely wait until there are less unknowns before either buying or selling real estate.

Mass Exodus from Certain Markets

Another surprising factor that is currently occurring in some markets within the United States is a large group of residents deciding to relocate to other states that have more favorable taxation conditions. California is one example of a state that has many of its wealthier residents considering to move to Florida, Nevada, or Texas in order to avoid controversial Propositions on their state election ballots this year. Due to the uncertainty in their home state along with the Presidential election, these buyers and sellers may still conduct their transactions and spike in the new states in which they choose to relocate to. This adds another potential boom to the U.S. real estate market for residents to flock to states with more favorable taxation conditions for their wealthier residents.

Final Remarks

Currently, the U.S. is in a very difficult and complex time both from the Covid-19 pandemic and the contentious Presidential election. The combination of these two elements has had an impact on the entire U.S. economy given that 2020 has been one of the most difficult years that the U.S. has seen in generations. While there are absolutely still opportunities in the U.S. housing market, the outcome of the Presidential election will be very likely to have an impact on the housing market. For these reasons, it is important for prospective real estate investors to take careful, and measured steps in order to get the best possible outcomes for their portfolios.

--
Jacquelyn Annete Garcia Vadnais is an Investment Consultant and field expert blogger for Barracuda Consulting.

Jacquelyn has a JD/ MBA from Suffolk University, an LL.M in International Law from the University of Miami, and a B.A. from the George Washington University in International Affairs with a Concentration in International Politics. Jacquelyn speaks English, Spanish, French, and Portuguese and has lived in ten countries. Jacquelyn has done work for firms such as Boston Consulting Group and has worked with firms based in over ten countries in the fields of Real Estate, International Law, Expat Living, International Business, Forex Trading, and Travel. She has also volunteered her time and expertise at the Victims Rights Law Center based in Boston, MA.

Please leave your comments below. If you would like to subscribe to our newsletter, click here: https://tinyletter.com/barracuda-consulting. To purchase a full real estate report, or to access a complete suite of investment advisory services please contact us: https://www.barracuda-consulting.net/contact.