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NAR: How will a Trump presidency impact real estate?

(REAL ESTATE NEWS) With Trump in power and Republicans taking the House and Senate, what does this mean for real estate practitioners and homeowners?


Did the election help or hurt real estate?

Regardless of how you feel about the national election results, it appears homeowners and Realtor populations will benefit from them.

“It was a great night for us,” NAR Senior Vice President Jerry Giovaniello said regarding the Realtor Party (RPAC), and thereby the Realtor population and homeowners.

Giovaniello reports that over 90 percent of races RPAC was involved in were won last night, which is a huge win given that members of Congress are aware of this track record.

With Republicans controlling the White House, Congress, and Senate, what of state and local elections? NAR Political Consultant Doug Sosnik pointed to three election wins that RPAC was highly involved in – Governor Gary Herbert (R-UT), Governor Phil Scott (R-VT), and a constitutional amendment in Missouri to ban sales taxes on services.

Will Trump support the Mortgage Interest Deduction?

Under a Trump administration, Giovaniello says that because of Trump’s knowledge of real estate and development, he will have valuable input to offer Congressional tax committees, based on his “successes and shortcomings.”

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It appears, however, that with Republicans at the helm, several tax incentives could be at risk.

When politicians say we must “simplify tax codes,” Giovaniello hears it as a euphemism for “going after homeownership incentives” like the Mortgage Interest Deduction (MID). There are already proposals on the table, and Giovaniello says they’re already talking to the authors on both sides of the aisle.

“The Realtor platform did mention that [the MID] is important, but they weren’t very specific, nor were Democrats on this,” noted Giovaniello. What does a Trump presidency mean for the MID? “We’re not exactly sure,” given that what will be prioritized won’t be clear until he is sworn in. Trump has indicated he supports the MID, however, and Giovaniello points out that Trump “knows the tax code as far as real estate is concerned, and has used it very successfully.

What about 1031 Exchanges or land real estate?

Regarding land real estate, NAR has long dealt with these issues (be they water, environmental, or other). Giovaniello notes that how they will be impacted by the election results “remains to be seen,” as the administration’s priorities have yet to be revealed.

Further, 1031 exchanges are in the crosshairs, and Giovaniello says they’re “in trouble next year,” because in recent years, both Congress and the administration have said we should limit these tax deferrals. There are proposals from both sides to limit 1031s, with the belief that the same numbers of transactions will happen regardless. “That’s just not the case,” Giovaniello asserts, noting there is a great deal of data to support the claim.

Will fear chill foreign investments?

Some areas are doing quite well as a result of foreign investments in the real estate markets, but will the perception regarding Trump’s attitude impact sales?

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Trump “has very strong opinions on immigration, so whether that leads to a chilling effect in the short term” is unclear, notes Giovaniello, reiterating that until priorities are set, we simply don’t know. “It’s something we have to be alert to,” he said.

Will Dodd-Frank or the CFPB be touched?

[clickToTweet tweet=”The election results spell a federal trend toward deregulation, state/local trend toward more regulations” quote=”Sosnik and Giovaniello agreed that the election results spell a federal trend toward deregulation with a state/local trend toward more regulations.”]

For example, Trump has blasted Dodd-Frank on the election trail, and much conversation has centered around loosening Dodd-Frank regulations as the economy has improved. Giovaniello anticipates impending debates as to whether or not regulations should be imposed on the “non-bank banks,” where half of all mortgage lending now takes place.

The Consumer Finance Protection Bureau regulations, and environmental regulations may also be on the table under Trump, with RPAC looking to keep the cost of building affordable housing and low as they continue to fight for homeownership.

Home buying incentives and flood insurance

As homeownership rates creep back up, Giovaniello doesn’t anticipate new tax credits for the purchase of a home under a Trump administration, noting a more likely scenario would be student loan refinance initiatives. Republicans believe that FHA should be available for first-time or low-income borrowers, but want to end incentives for high-income Americans. That appears to be the direction incentives will head.

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One federal item RPAC is watching closely is the flood insurance bill, as each region has an opinion on what should be done, continuing a cycle of Congressional extensions to bridge times of disagreement.

NAR’s focus isn’t on the presidency. Why?

Although NAR pollsters followed the national election, the organization maintains a “hands off” policy, which Giovaniello says is “wise.” He notes it can be cost prohibitive, their grassroots make them “the most effective association in D.C.,” and that most of their business is done at the Senate and House of Representatives where they “can have an impact.”

“Our strength is a bipartisan approach,” Giovaniello adds.

Gridlock, and gobs of governors

Will there be gridlock under a Trump presidency? Giovaniello doesn’t think that’s going away, but says “The American people voted for change yesterday. I think either party that doesn’t embrace that is going to be in bad shape, starting right now, as a matter of fact.”

Sosnik notes that regardless of last night’s results, in 2018, there will be 38 governor elections, over half of which will be open seats, making real estate practitioners and homeowners “vulnerable.”

What will RPAC do? “Make your friends before you need them,” Giovaniello and Sosnik agreed. “We’re about to have a new, impactful class of governors, so we need to get in early now, before campaigns start,” said Sosnik, noting they must proactively engage the candidates.

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The goal of the Realtor Party

Sosnik said, “no other organization has the capacity to be more impactful than Realtors – they’re in every community, are leaders in the community,” and it is essential to engage locals in what has become a “permanent campaign style,” with locals being highly interactive with their representatives.

The goal of the Realtor Party is to coordinate national, state, and local levels and leverage their national scale to enable those at the local level that know their communities best. Sosnik says they will continue this proactive approach toward politics.

“Trump has been a dealmaker all of his life”

“There will be compromises,” Giovaniello notes. “Trump has been a dealmaker all of this life. I’m optimistic on our issues,” even in a busy year coming up with focus being directly on flood insurance and Fannie Mae/Freddie Mac reform.

In conclusion, Giovaniello says of the election results, RPAC “did very well,” winning 90% of the races they were involved in, but are now preparing for post-election life now that the chips have fallen, by planning for the coming battle over federal and state regulations and a massive national gubernatorial race.

Take some time out to watch the full video interview with Giovaniello and Sosnik:

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.


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