Not Every Real Estate Specialist Views The Trump Presidency As A Net Positive With U.s. Pending Home Sales Falling To The Lowest Level In A Year

Sharing is Caring!

by Umar Farooq
US pending home sales unexpectedly fell by 2.8% in January, according to the National Association of Realtors. Buyer demand for housing is as strong as it’s been since the recession, the NAR said. However, “the significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay,” said Lawrence Yun, the chief economist, in the release. The S&P/Case-Shiller index of home prices shows that American houses are as expensive as they were before the Great Recession. While economists aren’t warning of another credit-induced bust, their concern is that limited inventories and higher interest rates may combine to raise the costs of home buying. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location,” Yun said.
 

Source: cnbc
Alongwith this downfall in home sales, not everyone in the real estate industry is viewing Trump’s presidency as favorable for the marketplace. Take Tommy Sowers, from GoldenKey, a real estate technology platform with locations in San Francisco and Durham, N.C. Sowers holds a “strong belief” that President Donald Trump will actually be detrimental for the real estate industry, making it less affordable for Americans to buy homes.
“During the campaign, Donald Trump spoke about home ownership numbers being the lowest they have ever been since 1965 at 62.9%,” says Sowers. In a nation where homeownership is seen as synonymous with the American dream, it’s no surprise that he wanted to highlight this low rate and suggest ways to increase it, he says. “The reality is that his policies and actions indicate the opposite,” he says.
 
Sowers lists several reasons why Trump may not be the industry savior some real estate professionals might have counted on:
 
Rising interest rates
 
“While this responsibility sits with the Federal Reserve, which has kept interest rates low in recent years, Trump has blasted them for doing this stating that they are ‘creating a false economy,'” Sowers explains. “Most economists predict that interest rates will now rise in 2017.”
 
Dismantling Government Sponsored Enterprises (GSEs)
 
“During the 2008 financial crisis, the taxpayer bought out Fannie Mae and Freddie Mac and now under government control they play a greater role than before the crisis in sustaining real estate sales and providing liquidity to the housing market,” Sowers says. “Trump wants to privatize them – a shake up to this arrangement could mean that banks stop offering the lower cost 30-year fixed rate mortgages.”
 
Cutting FHA home insurance
 
This was one of Trump’s first acts in office, making it more expensive for borrowers to insure their homes, Sowers notes. “His pick for Treasury Secretary, Steve Mnuchin, wants to limit the mortgage interest deduction,” he adds. “This may not impact the average US homebuyer but in many areas across the country the average home is above the threshold of $500,000.”
 
Immigrant confidence 
 
“We are a nation of immigrants and many are here legally with green cards,” Sowers states. “His latest immigration policy has sent shock waves to foreign investors and will likely stunt confidence in immigrants that are here legally from buying a home.” President Trump has said he hopes to encourage further building with the National Association of Home Builders, he adds. “However, with so many immigrants working in the construction industry, his policies are likely decrease the speed of development,” Sowers says. “With less new homes being built, people are likely to wait and not move or buy a new house.”
 
“Trump’s commitment to weakening the Consumer Financial Protection Bureau and the consumer protection provisions of the Dodd-Frank Act will have a harmful impact on the housing market in the long run,” predicts David Reiss, a law professor at the Brooklyn Law School, in Brooklyn, N.Y.
 
But most real estate professionals contacted by TheStreet over the past are of a different mind. They believe President Trump, given his decades in the real estate sector, is in their corner. “Never before have we had a President that is not only a business person but one who made his mark in real estate,” says Peter Vekselman, an Atlanta-based investor who owns three real estate companies and who conducts over 200 real estate transactions annually. “This still leaves me extremely optimistic,” Vekselman says.

See also  CNN: Segregate Unvaccinated, Make Them Pay For Tests Every Day!!
See also  Biden Admin Arrests Pro Trump Billionaire on Ridiculous Charges
702 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.