Across the pond the world turned to Britain for its decision on Brexit which would take many by surprise; shortly after, America would have its turn to surprise the world with one of its most heated and controversial elections in its history, closing with the triumphant Donald Trump to take office as President of the United States of America for the next four years. Consequently, all this uncertainty within the political sphere has had a great effect on various economic markets worldwide. But how exactly will those buying or selling their homes within the housing market be affected? The good news is, historically, housing markets are not heavily affected by elections, rather any drastic changes will be much more pronounced within the stock market. According to a study by the California Association of Realtors, “Market fundamentals such as housing inventory, affordability, interest rates, job growth, and consumer confidence are the real factors that influence the housing market” says, CAR President Pat Zicarelli. Here are 3 things we might expect for the housing market in the upcoming years post-election:
- Growth in Home Value
More than 100 housing and economic experts were interviewed by Zillow’s Home Price Expectation Survey and foresee that in 2017 we will see a growth by 3.6% a slight slowdown compared to this year’s 2016 National Home Value which is so far at 4.8%. This may come as a relief to buyers in the upcoming few years especially as more millennials are becoming homeowners. First time buyer’s made up half of all buyer’s in the past year. NAR Chief Economist Lawrence Yun explained: “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession.”
- Boost in Home Building Activity
Trump throughout the election has spoken of de-regulating the business market in America to create more profits and jobs by allowing opportunities for small banks to give out more loans and boost home building activity. At a meeting of the National Association of Home Builders in August, Trump said that “there’s no industry, other than probably the energy industry, that is more overregulated than the housing industry.” Traditionally, local and community banks have been the source for funding construction and land development loans. A recent study by the Urban Institute found a significant gap between new housing construction and household formation, estimating more than 400,000 fewer homes are being built than are needed. Trump’s plan for deregulation will help reduce this issue. Although immigration policies by president-elect Donald Trump raise concerns as immigration plays a major part in the construction work force. Much of the decision on housing regulations is down to the state and local level, Donald Trump can use the tools the federal government has to increase housing development which would be great for the economy.
- Interest Rates will Remain Steady
This coming December the Federal Reserve will introduce a gentle increase to interest rates. Although, there is still much uncertainty in the air especially in regards to the beginning of the upcoming year which will leave the interest rates at a steady rate until issues are given more clarity and stability presents itself within the Trump Administration. There is speculation that later down the road interest rates may begin to rise quickly if Trump’s plans of economic growth cause inflation.