How Will a Trump Presidency Affect Real Estate?

How will the Trump presidency affect the real estate market locally and nationally? We’ll dive into that topic today with the most important things to keep an eye on.

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What will a Trump presidency mean for the real estate market, especially here in San Diego?

For starters, interest rates went up the day he won the election and continue to rise; rates are already a half point higher than they were pre-election. They are still low by historical standards, though. We’re seeing a lot of buyers coming into the marketplace with rates this low, knowing that rates are on the rise. You can lock in a low rate for a home or an investment property to create some cash flow at a low cost.

Secondly, we’re hearing some protectionist rhetoric as far as keeping jobs in America through policy, taxing, and penalizing companies for sending jobs outside the country. Don’t get me wrong—I love that we’ll have more American jobs, we just have to understand that this rhetoric can very easily turn into inflation beyond the normal levels. We’ll be watching this very closely.

The third thing we’re watching closely as Trump starts to do away with what he sees as liberal policy is the way he approaches the Dodd-Frank Act. This bill was the response to the crash in 2008 that put a ton of regulations in the financial markets. In my opinion (and by most of the people in our industry) it was really far-reaching and over the line. Its intent was good, but it went so far that Trump is targeting it to dismantle it as much as possible. He probably won’t be able to abolish it entirely, but he’d like to make it as much of a shell of itself as possible.

Locally, this means we’ll see looser lending enter the marketplace. We’ll have to watch and see if looser lending also goes over the line. Will we get to the point where it makes sense, and then go beyond that point? I want to be clear that I’m not predicting that we’ll see the same thing as we did in the last real estate cycle. Looser lending will, however, lead to more distressed real estate later on once buyers start to default on loans. If you’re an opportunistic investor, there will be chances to pick up short sales or bank-owned properties.

When the market finally enters the shift, you’ll be able to capture properties that have a disproportionate drop because of the distress. The energy with which Trump attacks Dodd-Frank is absolutely one of the things to watch as the presidency relates to real estate in 2017.

If you have any questions about the San Diego market or you’re thinking about buying or selling a home, give me a call or send me an email. I’d love to hear from you!