President Donald Trump has been in power only for 50 days so far, it has certainly been an eventful time in the United States. There has been a lot happening in the country, good and bad.
We don’t want to get into the political aspect of the Trump Presidency on actions such as Immigration Reforms, as that is beyond the scope of this blog, but will instead focus on impact on the real estate market in the US.
President Trump is a man in a hurry, and he has been moving fast to make a number of changes to the housing market in the US. He has already drawn up plans to do away with Freddie Mac and Fannie Mae, tow of the biggest federal mortgage watchdogs.
He wants to limit the mortgage-interest deduction as well. This is something that has concerned the National Association of Realtors, who are against the removal of deductions on interest payments on mortgages, which is a major incentive for homebuyers in the country.
As of now, the mortgage-interest deduction has been capped at $1 million if you are married and filing jointly and $500,000 for homeowners who are still single.
Another major Trump policy seems to be to do away with the Dodd-Frank Wall Street Reform legislation of 2010. This was a regulatory system introduced by the Obama Administration to ensure that there are no housing booms and busts in the future. Trump now wants to get rid of it.
Housing advocates are in favour of doing away with this legislation as they say that it has prevented many homebuyers from getting loans. There are others who say that removing this legislation would be ill-advised as there are no other measures in place to prevent another housing bubble in the future.
Now, what about Fannie Mae and Freddie Mac? The Obama Administration had taken over these federal watchdogs in response to the 2000 subprime mortgage crisis. Back then, Fannie Mae and Freddie Mac were on the brink of failure.
Now, at this point of time, it probably does not make sense for the government to continue to support these organizations as the economy has picked up by a significant extent. That could be one reason why President Trump now wants to privatise both Fannie Mae and Freddie Mac.
One significant impact of the Trump presidency on the real estate in the USA would be that there is likely to be a clampdown on immigrants, especially from Mexico.
Like it or not, a significant number of workers employed in the construction industry are illegal immigrants. If they are stopped from working or deported from the country, this could slow down a number of real estate projects. So, this can have negative consequences.
Finally, a significant number of first-time homebuyers in the USA are recent immigrants. If immigration to the USA, whether legal or illegal slows down by any extent, this could reduce the demand for homes in the country. This may not necessarily be a positive development for you if you have a property for sale in the USA.