Yun: A new president always brings energy and excitement and thereby a modest boost to the broad consumer confidence. But given the deeply divided electorate in the recent election, the Trump administration also bring along great dismay. How major shifts as related to immigration, trade protectionism, and foreign entanglements remains uncertain and could be even more influential than real estate specific policies like changes to GSEs or Dodd-Frank. Unpredictability has been President(-elect) Trump’s mantra and therefore, for better or worse, the forecasts carry a large variation in potential outcomes than normal. Smoke: Without specific policies and actions to judge, it is too early to gauge the impact to the economy, let alone the real estate market. However, we can already see one big impact in interest rates as a result of financial markets expecting more inflationary pressure. Economic growth could accelerate somewhat with discussed tax cuts and
underperformance in areas where affordability is already hindering price growth, particularly in the low and middle price tiers. Any increase to mortgage rates would disincentivize a large portion of owners looking to capitalize on the current market climate and refinance at a lower rate, greatly cooling off a refinance market that saw sky-high levels of activity during 2016. A substantial rate hike in 2017 would be detrimental to the national housing market for borrowers, and for this reason is unlikely. However, because rates remain near such historic lows, it is unlikely that 2017 will bring lower rates. Expect interest rates to remain slightly higher than 2016 with the potential for modest increases later in the year.
expanded infrastructure spending. Both of these actions would likely be inflationary since the job market is already reaching full employment so more growth would drive wages and household income up. Higher wages and income would help buyers and should maintain and even build consumer confidence. However, these fiscal expansion programs won’t help us resolve tight inventory and lack of needed growth in new construction. If anything, construction labor will be even more constrained in 2017 with a combination of more competition from large-scale public works projects as well as challenges to immigration. Higher interest rates will limit some of the growth in demand. Overall the net effect of the potential changes will likely be marginally positive for residential real estate. Muoio: A number of potential policies from the new presidential administration could impact the U.S. residential real estate market moving forward, though the timing and impact remains to be seen until further policy specifics are revealed. While there is still some uncertainty surrounding the actual policies of the President-elect, the new administration will broadly look to ease the regulatory stance toward the banking industry and this could result in looser lending standards and generally better credit conditions, which should include
5) How will the new presidential administration impact the U.S. residential real estate market?
ATTOM Data Solutions • P10
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