Headlines on the Effects of President Trump on our local Real Estate Market

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“Never make predictions, especially about the Future.”

But it is always enlightening and fun to collect statements from others, many of them Professionals, about how they forecast the real estate market under the next administration. Here are some “predictions” online right now. Some contradict each other for good measure. Keeping them in mind may help you navigate your way through 2017.Please remember, these are NOT recommendations or analyses.

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Federal Government will continue to shrink, but this reduction in work force will be offset by an equal or greater increase in private industry contracting.

Trump promised during his campaign for a government wide hiring freeze, and reduction by attrition with specific exemptions.

http://www.npr.org/2016/11/21/502905060/trump-wants-a-federal-hiring-freeze-but-it-may-not-save-money

Reduction of Federal work force will increase private sector contracting, which will offset any reduction in the total work force in the region. In fact, this may bring in additional money to the work force, as we all know, contractors get paid better than government employees in the immediate run.

http://www.bizjournals.com/washington/news/2016/11/09/how-much-worse-or-better-can-a-trump.html

Inflationary Policy

The Fed is likely to hike interest rate to strengthen the dollar and increase return on investment for cash vehicles. This may begin as early as December 2016.

http://www.kare11.com/money/how-trump-interest-hike-could-affect-finances/3592149Increasing interest rates will push mortgage rates higher, decreasing borrowing power for many buyers, as well as decreasing borrowing power for developers. This has begun already in anticipation of the rate hike.

http://www.cnbc.com/2016/11/14/trump-effect-pushes-mortgage-rates-to-4.html

Increased interest rate will bring in foreign investors, who may diversify their holdings in the US by continuing to fuel construction efforts by developers.

http://www.businessinsider.com/trump-presidency-impact-on-real-estate-2016-11

Deductions

By more than doubling the current income tax standard deduction, there is a possibility that Mortgage interest deduction may go away. This can result in lower incentive for ownership versus renting, especially for first time home buyers. This possibility is currently a conjecture, but will be decided by February 2017, retroactive to the entire 2017.

https://www.washingtonpost.com/realestate/trumps-tax-plans-may-have-effects-on-real-estate-market/2016/11/14/99e15166-aa8f-11e6-8b45-f8e493f06fcd_story.html?utm_term=.b52b3d8294ef

Corporate Tax Rate Reduction from 35% to 15%

The reduction of corporate tax rates to 15% possibly even for Sole Proprietorships and LLCs can positively impact family businesses and small scale landlords in our area. Many of us will want to sell our losses in 2016 and defer gains until 2017 to take advantage of lower taxes next year.

http://www.forbes.com/sites/anthonynitti/2016/11/09/president-trump-what-does-it-mean-for-your-tax-bill/#370e724f

Increased defense spending

Trump Administration may spark a business boom among the defense sector firms in the region, fueling new buyers in the region and resulting increase in property values.

https://www.washingtonpost.com/news/where-we-live/wp/2016/11/10/what-effect-the-trump-administration-will-have-on-the-housing-market/?utm_term=.30b6ad3eb71f

Reduced Federal Regulation

As a Real Estate Developer, Trump will know exact which regulations must be eliminated to stimulate growth for developers.

https://www.washingtonpost.com/business/mr-business-goes-to-washington-now-what/2016/11/12/8c7f7846-a6e2-11e6-ba59-a7d93165c6d4_story.html?utm_term=.0ad0e5631485

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Deregulating Wall Street will allow the return of easy credit, creating more buyers for the developer’s constructions.

https://www.washingtonpost.com/business/mr-business-goes-to-washington-now-what/2016/11/12/8c7f7846-a6e2-11e6-ba59-a7d93165c6d4_story.html?utm_term=.0ad0e5631485

Immigration Reform will increase cost for builders, resulting in higher price for newer constructions

Trump policies will reduce the work force by 5%, increasing wages for American workers,

https://www.economy.com/mark-zandi/documents/2016-06-17-Trumps-Economic-Policies.pdf

This will increase the cost of construction as result.

http://time.com/money/4566401/trumps-deportation-immigration-plan-numbers/

China and Russia Policies, which way?

An aggressive policy against China could potentially cause a flight of Chinese capital from California, potentially triggering a housing crisis like event.

http://www.mansionglobal.com/articles/46563-trump-s-presidency-will-impact-luxury-real-estate-markets-globally

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Conversely, an accommodating policy against China may help ease China’s current restrictive policy on overseas investment, bringing in more cash to American developers. Even with the current restrictions, Chinese investors are scrambling to get their money out of China.

http://www.scmp.com/news/china/economy/article/2046056/how-shanghai-white-collar-worker-joining-frantic-scramble-shift

A rapprochement with Russia may bring back Russian cash into our housing market, starting an increased demand on the luxury market.

http://money.cnn.com/2016/11/09/investing/russia-putin-sanctions-donald-trump/

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CAVEAT EMPTOR!

These are just observations gleaned from a very quick scanning of the internet for entertainment purposes only. Pleased consult your CPA, Tax Attorney and Financial Adviser for actual financial and tax advice.

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