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Investors and homeowners are closely monitoring potential results in the forthcoming United States presidential election. The possibility of a second term for former President Donald Trump is one scenario that warrants attention. Read on to explore how such an outcome could affect the U.S. real estate market, particularly regarding interest rates, economic policy, and housing developments.
Interest Rates and Refinance Boom
According to Marty Harlee, president and CEO of First Trust Financial, the election of Donald Trump will lead to a recommendation to lower interest rates. “If former President Donald Trump should win the upcoming election, we would see another massive refinance boom along with a record number of home sales,” Harlee told GOBankingRates. “Lowering rates would move every other industry upward as well.”
Such a move would trigger another massive refinancing boom, resulting in increased sales of homes. Lower interest rates, which are beneficial to individuals and the economy as a whole, encourage homeowners to refinance their mortgages.
Economic Policies and Housing Market
Deregulation and tax cuts have been the focus of President Donald Trump’s first term. Dennis Shirshikov, a professor of finance, economics, and accounting at the City University of New York, said, “For instance, the Tax Cuts and Jobs Act of 2017, which Trump signed into law during his first term, led to an increase in after-tax income for many individuals and businesses, providing more capital for home purchases and investments in real estate.”
Such policies could stimulate economic growth and increase Americans’ disposable income, leading to home purchases and real estate investments. The Tax Cuts and Jobs Act of 2017, which increased after-tax income for individuals and businesses, may continue to shape the housing market.
Additionally, Trump’s administration worked on increasing homeownership rates, extending eviction bans during the pandemic, and proposed privatizing Fannie Mae and Freddie Mac. These efforts could have long-term effects on housing affordability and availability.
Concerns and Considerations
Although opportunities may arise in the second term of Donald Trump, there are also concerns. “In general, interest rates and the housing market always do well with Republicans in office,” Harlee said. “I think it’s safe to say the same would be true if Trump wins reelection.”
“Trump’s tenure was marked by significant market volatility, partly due to his unconventional approach to policy and communication,” Shirshikov said. “
Housing prices may rise if interest rates fall, which would reduce the amount of available housing. For a healthy real estate market, it is essential to balance stimulating demand and preserving stability.
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