How President Trump May Impact the Real Estate Investment Market

With every new presidency, there is some level of uncertainty in the real estate market. Interest rates, government regulations, employment rates, and other factors influence the demand for real estate and changing home prices. Now that President Trump has been in office for a few months, we thought it would be helpful to take a look at how President Trump may impact the real estate investment market in Southern California and throughout the country.

Interest Rates

Interest rates have already gone up once since Trump took office and it’s predicted to increase even further. Although rising rates are often a negative thing, in the short term it’s forcing people to act more quickly. Even with the recent increase, mortgage rates are still at historical lows. Buyers are desperate to find homes before rates go up any higher. This is good for the real estate investment market since it increases demand for properties being sold post-renovation/flip.

Home Prices

In Southern California and in many other parts of the country, demand for homes is much higher than available inventory. This is driving up home prices. Prices have been rising steadily for some time now and it’s expected to continue down that path. Real estate investors obviously benefit from higher sale prices.

Government Regulations

President Trump has made it clear that he supports fewer government regulations. Easing restrictions in the lending industry would loosen underwriting standards and allow more home buyers to qualify for a mortgage. This would positively impact the real estate prices by allowing more buyers into the market. Again, increased demand and higher prices are typically good for the real estate investment market.

Tax Reform

Tax reform is expected as part of President Trump’s agenda. If changes (limitations or removal) to mortgage interest deductions, capital gains exemptions, and property tax deductions occur, it would reduce the financial benefits of home ownership. This would have a potentially negative impact on the market, particularly for individuals comparing the benefits of renting versus buying a home. Fortunately, for real estate investors, this may not have a huge impact.

Investors have the opportunity to either sell or rent investment properties. Decreased demand for home purchases will normally increase demand for rental listings. Therefore, it simply shifts the way Southern California real estate investors obtain a return on investment. Properties may be held for rental rather than sold, based on which offers the better return on investment.

The Big Picture – How President Trump May Impact the Real Estate Investment Market

President Trump being a real estate mogul is a good thing for the real estate investment market. Being an investor himself, he is likely to promote changes that improve the benefits of investing in real estate. Additionally, investors are not necessarily impacted by the same factors as individual buyers. Ultimately, most industry professionals believe that President Trump will have a very positive impact on real estate, particularly for investors like himself.