What does a Trump presidency mean for the U.S. housing market?

If my Facebook feed is any indication, the outcome of this year’s presidential election was an absolute shock to almost everyone paying attention- even to those who voted for The Donald!  Hardly anyone in mainstream media thought there was any chance Donald Trump would walk away with victory over Hillary Clinton after all was said and done.

I voted. It made me feel weird inside.

A quick preface:  The purpose of this post is not to give my opinion of whether or not I think Trump will be a good president.  Additionally, I understand that there are going to be some reading this who have real concerns about some of the implications of a Trump presidency.  I do not mean, at all, to trivialize these fears or concerns.  It’s just…that’s not the purpose of this post.  Lastly, this is not a nuanced or technical economic research paper.  I’m just going to give a few simple and digestible points as I feel led.  OK, onward!

What do we know?

So, what affect will a President Donald Trump have on the U.S. housing market?  In short, (SPOILER ALERT!), I don’t know.  I think we may only know the answer to this question in hindsight.  However, I do think we have some clues.  For instance, here are a few simple facts about Trump that I think are pertinent to this topic:

  • Donald Trump is a (newly reformed) republican.
  • Donald Trump is a businessman.
  • Donald Trump made his billions in- you guessed it- real estate.

Republicans, in general, are in favor of less government intervention in the marketplace.  Democrats, on the other hand, are generally in favor of more regulation.  Check out the 2016 Republican Platform (specifically pages 3-4) for an indication of where the party as a whole stands on the housing market.  Many republicans blame our most recent housing crisis on federal manipulation of interest rates and other interventions.  Therefore, it’s logical to assume Donald Trump will advocate for policies that repeal lots of the regulations on financial markets.  What would the result be?  Well, that depends on who you ask.  Ask a republican and they’ll tell you this might cause a correction in the market and long-term stability.  Ask a democrat and they’ll tell you this will cause more corporate greed and predatory lending, which could cause yet another economic collapse.  Who’s right?  I guess we’ll see!

donald_trump_thumbs_up
Photo courtesy of Wikimedia Commons

Short term

After last Tuesdays election, mortgage interest rates spiked sharply.  “I don’t know that it was specifically Trump…but I’ve seen interest rates rise a full point in the past week.  We were in the low 3%s and now we’re in the low 4%s.” says Randy Atkinson of Movement Mortgage.  This shouldn’t be a huge shock.  After all, mortgage interest rates are tied to demand for mortgaged-back securities (MBSs)- that is, investors.  Of course, there are several other factors but the primary one is MBS demand.

When looking at this past election more broadly, Hillary Clinton represented the “status-quo” candidate.  (I don’t necessarily mean that in the pejorative sense at all.)  I mean, for all intents and purposes, a Clinton administration probably wouldn’t have interacted with the economy in much different a way than the Obama administration.  Investors- even if they disagree with Obama’s approach- know how that game works at this point.  If Hillary had won, investors would have perceived less risk in putting their money in housing-based investments.

On the other hand, Donald Trump represented the “change” candidate.  (Again, I don’t necessarily mean that in a pejorative sense.)  Unlike Clinton, Trump ran his campaign on the idea of a complete overhaul of Washington’s involvement in market affairs and a total deconstruction of what Obama has built over the past eight years.  Investors- even if they agree with this approach- do not know exactly how that game might work.  Therefore, these investors perceive more risk in housing-based investments.

My point is this:  The fact that interest rates spiked immediately following the election is not a sign that the sky is falling or that Trump’s policies are bad for the economy.  I’m not saying his policies will be good for the economy- we can’t know that yet.  But with respect to an interest rate hike;  that’s the way it always would have been.  The same thing happened with financial markets all over the world after Brexit became imminent.  It was merely the prospect of change that leads to short-term volatility in the marketplace.  A week after Brexit and things were virtually “business as usual”.

Long term

Now, let’s consider the possible long-term effects of a Trump Presidency.  On this topic, there are lots of people way smarter than me who have diametrically opposed opinions.  What makes this even more challenging to comment on is the fact that Donald Trump was largely silent on the subject of the housing market on the campaign trail.  So, nobody really knows what his plans are…at least nobody who’s talking!  I do believe, however, that there are two policy changes that are probable during a Trump presidency that could affect the housing market:  1) tax cuts and 2) deregulation of financial markets in general.

Donald Trump has promised to cut taxes.  Many before him have made similar promises without delivering- but he talks the talk nonetheless.  Cutting taxes would, in theory, leave taxpayers with…well…less taxes to pay!  (See my logic there?)  This could allow potential homebuyers to spend that money on a new home.  Americans do have a saving problem.  So, a Trump tax cut could provide a helpful nudge for some of those buyers who need him just a little more cash for the downpayment.

Donald Trump has also promised to either cut or drastically reform regulatory agencies and programs like the CFPB and Dodd-Frank.  There are also proposals to ease restrictions on home builders, which could make building new homes less costly thereby making them more affordable for buyers.  As mentioned above, many republicans view this deregulation as a beacon of hope; many democrats see it as a sign of impending doom and an enabling of predatory lending and corporate thievery.

My two cents…

Who’s right?  I guess we’ll see in four years!  Check back then for an update.  🙂

So, how will Donald Trump’s presidency affect the housing market?  My guess:  Not much.  If history has taught us anything about presidents in the modern era, it’s this:  Most of them, in practice, are a lot more “status-quo” than they claim to be on the campaign trail.  I mean, this is politics after all, right?  Only time will tell if Donald Trump is truly the renegade outsider he has claimed to be.  For those hoping he is the next American savior- I think you might be sorely disappointed.  For those announcing the arrival of the antichrist- I think you might have to wait another four years.

 

Barrett Raven
barrettraven@gmail.com
512.970.2648

Advertisements

This is YUGE!

I have some monumental (some might even say “YUGE!”) news!

img_5088

After a few amazing years at GoodLife Realty, my first ever real estate brokerage, I recently made the decision to “Make the Move” over to Realty Austin.  This was certainly not an easy decision to make as I have so much love in my heart for my people at GoodLife.  It’s where I started this career I love so much and the mentorship and guidance I received there will serve me well until I stop selling real estate…which will probably be when I’m 89.

That said, the resources and tools I have at my disposal with Realty Austin are going to allow me to serve my clients, customers, and friends in a way I never really thought was possible.  (More on that later…)  But let me tell you- changing real estate companies is a BEASTLY undertaking!  As part of my transition, I wanted to kind of “tighten things up” with regards to my blog, calendar, daily activities, database, etc.  I’m nowhere near complete but as part of these efforts I have switched my blog site (still barrettraven.com) over from Blogger to WordPress.  So, you might- if you’re a regular visitor to this here real estate blog- notice a few changes.

change
“A change, you say?…BRING IT!!!”

Still, the heart and purpose of this blog remains the same:  To be an educational resource for you with regards to home-buying and selling and to share my real estate adventure with you.  I’m still in the process of transferring all of my old YouTube videos over to my personal YouTube account and reentering all of the info on each one.  But you can still check all of them out HERE!

A few other quick resources:

  •  Search the MLS!  Austin’s Multiple Listing Service (MLS) is where almost every house is listed that is currently being sold in Austin as well as the surrounding areas.  Visit the Realty Austin website and start browsing away!
  • My bio page.  There are many of you who visit this blog to get helpful tips with real estate…but you don’t really know me!  Well, my bio on the Realty Austin is basically a blog post on its own!  🙂
  • My personal newsletter!  Shoot me your email address (barrettraven@gmail.com) and I’ll add you to my personal friends and family newsletter that I send out about every six weeks.  Realty Austin distributes their own automated monthly newsletter on my behalf and- don’t get me wrong- there is some great stuff in their created by some great researchers.  However, you can be sure the stuff you get from me directly will be hand-crafted by yours truly and is a little bit deeper of a dive into my personal life and business.

OK, that’s enough for now!  With the brokerage move, which included extensive orientation and training, as well as a few other major personal events (mostly good!), my blogging has become a little inconsistent.  But Raven is back in town and I couldn’t be more excited about what the future holds!  As always, do not hesitate to reach out if you have any questions at all about Austin, home-buying, home-selling, or…well…just about anything!  See you soon!

blog-signature-wra-branding

Barrett Raven
barrettraven@gmail.com
512.970.2648

Math Lesson! (September’s Market Stats Update for August)

The Austin Board of Realtors just released the newest round of stats for the month of August.  Check out the video below where I break down (what I think are) the most important take-aways!  Everyone knows this market is a bit nutty.  But how nutty is it, you ask?  Watch the video and judge for yourself!

If the video doesn’t show up below, check it out HERE on my YouTube channel.

Windows reflect many things…especially my OCD

I’m all about green technology.  These days, there are so many upgrades you can make to your home that not only help the environment- but they can also save you a crapload of money!  You can upgrade/add insulation in your attic as well as the walls; you can go solar; you can get energy-efficient appliances; you can do low impact landscaping with timed drip irrigation; you can even get energy-efficient roof shingles.  But one of the best things you can do to your home is upgrade the windows.  
 
All homebuyers I work with quickly learn that I’m a little OCD about three things:  HVAC Safe-T switches, water heater drain pans, and- you guessed it- windows.  So, how the heck are you supposed to assess the window situation in your current home…or the home you happen to be viewing at the moment?!  Well, the super short article below was posted recently on the Texas Association of Realtors blog and I just had to share.  Enjoy!
 

 

5 ways to tell if the house you’re touring will need new windows

 
Two-story yellow home with front-facing garage
08/26/2016 | Author: Fran J. Donegan, guest expert
New windows are an expensive investment, easily costing $300 to $1,000 per window, and most homebuyers don’t factor in window costs when searching for a new home. However, if you’re aware of what to look for when touring a home, you can spot windows that may need repair or replacement. Here are things to pay attention to:
1. Windows that are difficult to open and close. You might not be able to test every window in the house, but try some out. If you are unsure, you can ask permission.
2. Damage to window frames. Look for signs of water damage, rotted wood, or recently made repairs, both inside and outside.
3. Missing hardware. Most hardware can be replaced, including cranks for casement windows, but if the hardware is missing, it could be a sign that the window does not work properly.
4. Foggy double-pane windows. Condensation between the panes of glass means the seal has been broken and the energy efficiency of the window has been compromised.
5. Single-pane windows. This is a sign that the windows are fairly old and not very energy efficient. New double-pane windows are much more energy efficient.
Consider future maintenance when surveying the windows. Wood windows need to be scraped and painted every few years. If new windows are an option, there are number of low-maintenance models available, including vinyl, fiberglass, and composite, as well as wood windows where the wood is exposed inside but covered with vinyl or aluminum outside to protect it from the elements.
If you get to the stage of the buying process where you visit the property with a home inspector, point out any concerns you have.
While you may not have planned to spend money for window fixes as a new homeowner, you’ll benefit in the long run by having a more energy-efficient home.
Fran J. Donegan writes on home improvement for Home Depot. Fran is a longtime DIY author and has written several books, including Paint Your Home. To review a number of window installation options, you can visit homedepot.com.

The Beast (July’s Market Stats Update for June!)

The Austin Board of Realtors recently release their June stats for the Austin area.  Honestly, last month was more of the same (for the most part).  Average and median prices are increasing; inventory is super-tight; more and more Austinites are moving to the suburbs for more reasonable prices; at the same time, migration to Austin is growing evermore!.

 

What I personally find interesting is digging into the numbers of specific areas/zip codes.  Check out the video below where I take a tiny dive into the stats of one central Austin zip code.

 

If the video doesn’t show up above, check it out HERE on my YouTube channel.

 

"Williamson vs. Travis County"…(June’s) May Market Stats Update!

If you are a home-seller in Austin, TX, you’ve still got the upper hand.  As long as you are priced somewhere in the range of what’s reasonable, you should sell very quickly…and you’ll likely have several interested parties.  Multiple offers have really become the norm.

Background photos courtesy of Wikimedia Commons
In the video below, though, I talk a bit about an area that is growing significantly in popularity.  With pretty good schools, easy access to I-35, MoPac, HWY 183, etc., and relatively affordable prices, Williamson County (Cedar Park, Round Rock, Leander, Georgetown, etc.) is experiencing somewhat of a boom.      

The Austin Board of Realtors just released their market stats numbers for May 2016.  Check out the video below where I run through some of the numbers!  (If the video doesn’t show up below, check it out HERE on my YouTube channel.)








Barrett Raven
C:  512-970-2648
O:  512-910-7403

Test-driving a Tiny House…

Over the last couple of years, I have had periodic requests from buyers who are interested in exploring tiny house living.  (Check out Austin’s own Kenga Room Systems– sweet prefabbed tiny houses.)  

Background photo courtesy of WIKIMEDIA COMMONS
The reality is that tiny house living is getting more popular by the hour- especially in dense metro areas like Austin.  Real wages are simply not growing at the same rate of home prices.  Therefore, those of us that desire to live in the city are having to be creative in order to make it work.  For example, I’ve heard of many families going in on a home together and then splitting the house payment 50/50 and just living together.  Others are renovating garage apartments or ADUs in order to offset higher house payments.  I also know quite a few families who head out of town almost every weekend so that they can rent their house out as a vacation rental to out-of-towners.  

Another option that is gaining in popularity is the tiny house.  The miniature dwelling are cheaper to build and more efficient to heat, cool, and power.  If you can find a lot big enough to hold your tiny house, it’s very likely that you will be saving money hand over fist.  The only real challenge is…you have to live in a house that’s really tiny!  

I came across this video (below) on the New York Times website where Penelope Green “test-drives” a 300 square-foot apartment in Manhattan’s new Carmel Place building.  

Enjoy!











Barrett Raven
C:  512-970-2648
O:  512-910-7403