residential real estate. Tighter lending standards have kept some potential buyers out of the market, and the potential for easing of these standards would fuel additional demand for home buying that was previously being funneled into renting. This would provide a boost to sales and prices in the short term, though it could also increase longer term systemic risks for the housing market if the pendulum swings too far. The greater unknown at this point is how soon and to what extent regulation will be loosened. The potential for reduced immigration could also hamper housing demand in certain regions that have been driven by demographic trends in recent years. Limiting immigrant workers that comprise a notable portion of the construction work force could also put a constraint on new home construction if it were to not only limit the labor pool but drive up construction labor costs. Treasury Secretary Nominee Steven Mnuchin has suggested that the popular mortgage interest deduction will be capped, but continue to allow some deductibility. Depending on where the cap would land, this could adversely affect higher-end homebuyers and higher prices markets. Mnuchin has also said that he wants to get Fannie Mae and Freddie Mac out of government control, and while details are sparse, it could elevate financing costs and put a constraint on lower income or first time buyers. There does not appear to be much clarity at this time, but these are

potentially significant issues that should be monitored going forward.

More broadly, if the Congress in conjunction with the new administration were to seriously revamp the tax code, cutting rates as they have suggested, while also boosting the economy through measures that improve business confidence and reduce regulatory burdens, it could provide a boost to economic growth, and with it household incomes and household formations, and the underlying demand profile for housing could see a concomitant boost. However, this remains purely speculative at this time until policy specifics are unveiled and enacted. Gardner: This is certainly the big question. As far as housing is concerned, mortgage rates are likely to rise a little quicker than previously expected; however, the marginal increase is fairly modest. That said, it will likely act as a bit of an anchor when we look at home price growth. Anticipated changes to, or possible repeal of, the Dodd-Frank Act could allow banks more freedom to lend which, in turn, will also add households with less than stellar credit to obtain a mortgage. This would certainly put additional pressure on the limited housing supply. Finally, a Trump presidency can also remove some obstacles currently in builders’ path. It is possible that they will see some additional tax breaks, and

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