The long election is finally over and the question I am getting asked a lot is, “What does it all mean for the real estate market?” A recent video put out by the National Association of Realtors sums up the election as follows:
- In Congress, not much has changed. Republicans controlled the House and the Senate before the election and they control the House and the Senate after the election. This will help NAR moving forward on flood insurance, tax reform, and the re-invention of Fannie Mae and Freddie Mac, since Realtors® had been working on these issues with the previous Congress, thereby providing continuity.
- Flood Insurance: The National Flood Insurance Program is $24 Billion in debt, which needs to be addressed. States vary on the importance they give this program and how flood insurance should be covered. Nevada has a different view than New Orleans and Florida and NAR is active in trying to negotiate a solution so that insurance is available and real estate transactions can continue taking place.
- Tax Reform: The mortgage interest deduction, property tax deduction, capital gains exemption and 1031 Like Kind Exchanges are all under consideration for reform. No bills have been filed yet, but there are different proposals that have been floated by a variety of legislators.
- Fannie Mae and Freddie Mac: Their future is totally up in the air and NAR will keep an eye on any new proposals that are put forth.
- Dodd Frank and the Consumer Protection Bureau: These will be revisited. Under Dodd Frank, regulations that affect smaller banks will probably be relaxed. Since approximately half of current mortgage lending is being done by non-bank banks (on-line lenders), regulations may start addressing them. Overall, the view is that federal regulations will be loosened and state and local regulations will increase.
Another topic that will be looked at is refinancing student loans, which would help get young people with a lot of student debt into mortgages and homeownership. This is obviously a national overview. I will go into more detail as to what the elections mean for us locally and for commercial real estate in future blogs. Stay tuned!