Election Day tomorrow! Not sure if it's a "battle for America's soul" or "the most consequential election ever," as has been framed by some, but ... it's a big one, and it's definitely gotten a lot of attention in the past, well, let's be honest ... four years. Now we're here, and while we probably won't have actual results until the end of the week, unless it's a rout one way or the other, we wanted to dedicate one post to discussing it.
We say one post because our goal is not to be political, but rather to help you find apartments and homes. However, whomever the sitting President is has some impact on your ability to do that -- the Federal Reserve may have more impact, and potentially not enough people realize that, but because we love the theater of Presidential politics, let's discuss how Biden and Trump stand on housing.
Bear in mind that much of Trump's pre-politics existence was within the real estate market, both as a landlord and commercial development, although since 2000, many of those commercial development deals were ostensibly branding deals and not how we exactly think of commercial development.
Potential housing market under Trump second term
This is a good article to start with. Some of the bigger positions for Trump, who hasn't defined an explicit strategy so much as talked often about "the suburbs:"
- Privatize Fannie and Freddie: This is probably his biggest proposal. Fannie and Freddie, which back about half of the nation's mortgages, were moved under federal conservatorship to prevent them from going belly up after the housing bust of the late aughts. In the ensuing years, there's been a big push to privatize them. To change the system requires Congressional action, so you also need to look at the splits this week -- if the party that has the Presidency and the party that has Congress are different, it's probably no dice. Basically, though, what would happen under Treasury's plan (Steve
Mnuchin’s) is an explicit government guarantee that will be structured like a kind of insurance policy. Fannie Mae and Freddie Mac will both pay an annual fee to the government, and in exchange their loans will be guaranteed by the federal government. That in turn is supposed to be paired with regulatory efforts to prevent them from abusing their guarantee. Conceptually, this seems to provide what many politicians imply they want — the affordable 30-year mortgages that only government action can provide, but without the embarrassing socialism of having the federal government at the commanding heights of the housing finance system. Some are worried rates could rise and the 30-year fixed would get messy under this plan, although Trump has denied it.
The suburbs: The Affirmatively Furthering Fair Housing rule was designed to encourage communities to allow more affordable housing, apartment and condo buildings, and smaller, more affordable single-family houses to go up. Trump and co. ended the rule for suburban diversification, which is what he often speaks of when he speaks of "saving the suburbs."
Tax rates: Trump capped property, income, and sales tax deductions at up to $10,000 in total at the end of 2017. His team lowered the mortgage interest deduction. Homeowners can write off only up to $750,000 of their combined primary and vacation homes. The previous limit was $1 million. This mostly benefitted South and Midwest home-owners. Upper-middle class homeowners in more expensive areas, who might logically go for Trump on other factors, saw their housing-related taxes rise.
The housing market under a Biden term
Here is, actually, a link to Joe Biden's detailed housing plan.
- Down payment tax credit: This would go up to $15,000.
- Down payment assistance and lower prices: Teachers, first responders, and other public and national service workers would also be eligible for down payment assistance and lower home prices. However, they would need to buy and move into homes in either struggling, lower-income neighborhoods or pricier communities that don't offer much more reasonably priced housing.
- Public credit agency: He's proposed creating a public credit agency that would help raise the scores of minority home buyers by considering things like rental payment histories and utility bills paid on time. This could help more buyers qualify for mortgages with lower fees and rates.
- Tax credit for low-income renters: Biden would offer low-income renters a tax credit designed so they pay only up to 30% of their income on housing and utilities. That's good, because 30% is roughly what you should spend on housing per month.
Here's another good summary of the two candidates on housing, per CityLimits. Broadly remember that a lot of this depends on who wins (obviously), but also who wins Senate/House elections, who wins judgeships, who wins local elections, etc, etc. It's a much bigger ecosystem than just who has the biggest chair.
If you have any questions about the rental or sales market here in DFW based on some of the results this week, don't hesitate to hit us up.