What Does a Trump Presidency Mean for the US Real Estate Market?

 

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I originally wrote this article last month, however, I decided to wait in hopes of providing you all with a little more insight into what a Trump administration will mean for real estate. It goes without saying, the implication of a Trump presidency is the most common inquiry I now receive and after speaking to several market professionals both inside and outside the real estate world, there IS a consensus on what the future will bring: UNCERTAINTY.

In terms of things likely to affect the real estate market, there are multiple factors. For example, while most agree Trump policies will lower taxes and bolster American’s ability to purchase property, there are also many predicting that interest rates will increase making the cost of homeownership rise. Of course, if the economy grows, then a rise in interest rates is not necessarily a bad thing. By the same token, some say the Republican’s plan to reform social programs might diminish the spending power of the middle class, or at the very least, affect consumer buying behavior. Diminished spending power means fewer home sales…

Furthermore, his potential changes to regulation & lending, Freddie Mac & Fannie Mae, zoning laws, the Consumer Protection Bureau etc should allow for a less regulated marketplace and free up institutions to conduct businesses at will. This will increase the number of qualified applicants for loans and allow a larger swath of Americans to purchase a home. On the other hand, some worry these changes will lead to another runaway lending situation that led to the economic collapse in 2008; or at least something on a smaller scale.

If you’re dizzy or confused at this point, that’s ok. The real estate market is like a big puzzle and if you add it all up, we come back to our original point: There is too much uncertainty to really know what is going to happen. 

What we do know is the real estate market is continuing to get stronger in most areas of the country. New construction startups are growing at a good clip and there are several metropolitan areas where home prices have rebounded quite nicely. Can the real estate market become even stronger under President Trump? Time will tell.

Not to avoid an answer here, but I would be lying if I told you I knew what was going to happen in the next 4 (or 8) years. A funny thing happens when someone begins to make predictions about big, complex industries; they tend to be more wrong than right. The best we can do is closely watch what’s going on in the market and attempt to anticipate any major changes. If I had to make a prediction, though, I would say the real estate market is going to get stronger in the short term. While Trump presents a certain amount of uncertainty (which markets generally dislike), indicators are pointing to their willingness to give the man a chance to see what he can do.

Got questions? Ask me anything!

Inspections are Where the Rubber Meets the Road…

 

With the help of a couple talented agents, getting a buyer and seller to agree on price can be a beautiful thing! It’s an exciting time for both parties and optimism is usually very high. Back in May, one of my clients thanked me at this point for my hard work and said, “It’s been a pleasure working with you!” Whoa!!! Not so fast! There’s still work to be done. Often times, inspections are where the rubber meets the road as it can take an emotional toll on both parties. In most cases, buyers want their new home to be “move-in ready” and sellers don’t wish to spend any more money than they need to.

Whether you have a buyer who is asking for unreasonable repairs or a seller who refuses to heed requests, inspections can very easily unravel a deal in a matter of hours. Perhaps at a later date, I will outline the entire inspection process, but for now….I have a few suggestions for both buyers and sellers. Every real estate transaction is unique, but these are general rules of thumb:

Buyers

  1. Always research your inspector or ask your real estate agent for a few recommendations. It can be beneficial when the agent and inspector have a prior working relationship.
  2. Be present for the inspection.
  3. If you aren’t buying new construction then assume that there will be small maintenance type things that come up at an inspection. A good inspector will point these out to you, but generally shouldn’t be asked of the seller.
  4. If there are large problems uncovered (roof, electrical, plumbing leaks, structural issues), then refrain from asking for minor fixes such as touching up paint, repairing nail pops, smoke detectors, etc. The sellers might think you’re “nickel and diming” them which is usually not received well.
  5. Remain calm and remember not to put too much emotion into this part of the transaction, even if the seller does. Deals can go off the rails in a hurry if both sides decide to take offense to the other side’s position.
  6. Ask yourself: “Would I find these repairs reasonable if I were the owner of the property?”
  7. Communicate via your agent.

Sellers

  1. Have your agent be present for the inspection if possible.
  2. Crunch numbers of all requested repairs before responding. Rely on data rather than your first impressions to guide your response.
  3. Ask yourself two things: “Will this problem come up in most inspection reports?” & “Is this something that I’d ask for if I were the buyer?” It is very important the seller answers these questions honestly. Getting upset and killing the deal only to have the next buyer ask for the exact same thing can be a very costly mistake.
  4. Consider getting an inspection done before you put your home on the market.
  5. Communicate via your agent.

Please send this along to anyone you think might benefit from this information. Of course, I’m only an email away and always happy to help!

seth.lejeune@foxroach.com