Ever since Donald Trump became US president elect, real estate analysts have wondered what could result from his appointment. Could the housing market take a tumble? Could lending open up because of his policies? While climbing interest rates have indicated an early sign of change, several experts have already made predictions.
In New York City, based on observations DNAInfo, the housing market has come to a standstill. If this city serves as a microcosm for the rest of the country to emulate, sales and prices may hit a plateau, leading to investors seeing slow returns or pulling out of the market entirely.
2. Higher Interest Rates
Since the election, interest rates on a 30-year, fixed-rate mortgage have climbed from 3.34 percent to 4.00 percent. Experts predict that interest rates might increase from the historic lows seen through 2016 and reach more of a “normal” level.
3. Less Disparity in the Housing Market
Since the housing bubble, the US market has two sects: higher-priced urban properties in major cities and lower-priced real estate in the South and Midwest, essentially reflecting the current break in party lines. Forbes estimates that, because of their support for Trump, the “red” areas might see more growth, resulting in a smaller gap between urban and rural markets.
Two of Trump’s proposed policies could indirectly impact the housing market. One, tax cuts on the wealthy coupled with spending on various projects, are predicted to result in inflation. In this scenario, experts think that inflation could lead to higher rent and housing costs without wages increasing to meet the demand, thus making homeownership out of reach for many individuals and thus exacerbating an ongoing problem.
On the other hand, new international trade policies, including higher tariffs on imports, could drive up the cost of consumer goods. As a result, supplies for new construction might come at a higher cost, thus slowing down new housing and commercial developments.
5. Easier Lending
Trump has said he plans to repeal the Dodd-Frank Act, a policy introduced during the Obama administration. Dodd-Frank placed stricter standards and greater oversight on lenders, but for consumers, this made getting a mortgage more of a challenge.
Consequently, getting rid of this policy and replacing it with policies designed to encourage economic growth and job creation could, in theory, offer more lending opportunities. However, experts warn that doing away with it could lead to another housing bubble.
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