Now that we know who the next president will be, how is it going to affect the real estate market? Allow me to explain by answering a few questions that may be on your mind right now:
Will Donald Trump use real estate to kick-start the economy? C’mon, we’re talking about Donald Trump, here. Before he was the future president, his business was real estate. Aside from that, most of the presidents from the past tried to use real estate as a vehicle to boost the economy, so we should expect to see more of the same from Trump.
What’s going to happen to mortgage rates? I don’t have a crystal ball, but I do know that the low rates we’ve been dealing with lately won’t last forever. In the last week, we’ve seen some fluctuation, because that’s what usually happens whenever there is uncertainty. I do believe that rates will go up soon, though, either within the next month or next spring when there will be more buyers on the market.
Is it going to be easier to borrow money? I believe so. I also think it will be particularly easier for small business owners to get a mortgage and become homeowners.
What’s going to happen with building regulations? Apparently, 25% of the costs of building a home are associated with regulations. That’s a lot of money! Trump has been talking about reducing that regulation to as little as 2%. If that happened, we would have far more homes coming on the market. One of the problems we’ve had here in the San Diego market is a lack of inventory. In the $500,000 to $600,000 price range, the year-to-date inventory has oscillated between 1.5 and two months. A reduction would result in home builders investing more money. More money means more development. This can only help us.
What about immigration? By this, I mean the effect any change in immigration laws may have on foreign investment. Let me put it this way: how many of you have been overbid on a property by an overseas investor? There are many of these types of investors who’ve been buying properties here and using them as rentals. I estimate that this has happened to at least 75% of my buyers. Increased immigration regulations may make it harder for overseas investors to do the same thing. As far as I’m concerned, I’d rather see more homeowners in San Diego and the rest of the U.S. than foreign investors using properties for rent.
If you have any questions about this topic, please feel free to reach out to me by phone or email. I’d be happy to help!