Understanding the Impact of Elections on the Real Estate Market
As we approach another election cycle, many are questioning how a change in leadership might affect the real estate market. Over my 65 years of experience, I've learned that the president's impact on the economy is often temporary, and my philosophy is to invest for the long-term rather than reacting to immediate changes.
I recall the first home I ever purchased back in the early days, priced at $26,500. Today, that same home would likely fetch around $1.18 million for a sale, illustrating the steady increase in property values over time. In general, real estate prices tend to go up as long as homes are well-maintained and located in stable areas, irrespective of who the president is.
Factors Influenced by Presidential Policies
While the president's influence on the real estate market is not usually direct, there are certain policies that can significantly impact it. For instance, during Bush Jr.'s presidency, lax regulations allowed for the housing market to run wild, ultimately leading to the financial crisis when banks lent to people who couldn't afford to pay their mortgages.
Republican Leadership and the Housing Market
If Donald Trump gets re-elected, it’s unlikely to see any significant changes in the real estate market. My prediction relies on the continuity of current policies. However, under a Democratic administration, we might see substantial changes, including skyrocketing housing prices and a rise in new housing costs. Increased regulations, similar to those seen in California, could lead to more stringent requirements and higher prices, potentially contributing to a rise in homelessness.
Elizabeth Warren and Affordable Housing
Should Elizabeth Warren win, she is likely to introduce policies that would result in more affordable housing and even housing for the homeless. This would be a positive shift, benefiting those in need and potentially leveling the economic playing field for a broader segment of society.
Market Value and Financial Trends
The market value of homes can be influenced by broader economic trends, but the relationship between an election and real estate market value is not always direct. President Trump's policies may have a delayed impact, but the changes are likely to occur over a longer period. If a Democrat is elected, the market is projected to rise due to increased spending, job creation, and higher wages, leading to an overall increase in market value.
Alternatively, if Trump or Pence wins, the reliance on billionaires and the rise of debt could devalue the dollar and lead to a decrease in consumer spending. This could result in higher unemployment, lower wages, and a decline in the housing market. However, these changes would likely take several years to fully materialize, with the overall trend potentially shifting within six years.
Summary
While the president can influence the real estate market through policy and regulation, its impact is often a long-term one. In the case of Trump's re-election, the real estate market may see little to no immediate change. If a Democrat is elected, the market is likely to see some significant shifts, including higher housing costs and the introduction of affordable housing. However, the full effect of these changes may not be felt for several years.
Investing in real estate, as always, requires a long-term perspective, focusing on the stability and value of properties over time rather than short-term fluctuations.