Forbes: How Trump's Presidency Could Impact Real Estate

How will the real estate market be impacted by Donald Trump’s victory and Republicans controlling both chambers of Congress? Though Mr. Trump is a real estate man, his policy platform has been largely vague on real estate proposals. 

Here are some thoughts on how certain real estate issues may play out under President Trump and of their potential impact to consumers:

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1. There will no doubt be a short-term stimulus to the economy. A combination of tax cuts and government spending in the form of upgrading nation’s infrastructure and for national defense will provide a short boost to the economy in the first half of 2017. Inflation will likely kick a bit higher from a faster GDP growth and that will lead to modestly higher interest rates. Accompanying gains in consumer confidence will further move the economy higher. Should the faster GDP growth be sustained and arise out of higher productivity, then inflation will be manageable. Moreover, more jobs will automatically mean more tax revenue, which will lessen budget deficit. Should, however, the stimulus impact give only a short term boost and not be durable then a much larger budget deficit will force interest rates notably higher. The future generation will be saddled with more debt.
2. The trade deficit will surely rise in 2017. That’s because a growing economy will allow Americans to drink more Italian wine, drive German sports cars, watch Korean dramas, and play Japanese game consoles. More vacation trips to Cancun and London are also likely. These activities always happen when consumers regain confidence about their financial well-being. Should tariffs be raised to lessen the trade deficit, consumers will face higher prices. If exports and imports significantly decline, then history has repeatedly shown that recession and job cuts soon follow. Most economists believe job training and re-training via community colleges are much better ways to help those who lose jobs from technological automation and from international trade.
3. There will be more gyrations in the stock market. Wall Street will cheer less government regulation but will frown on restrictive international trade policies. The current leader of the Federal Reserve, Janet Yellen, may be asked to step down and this perceived intrusion into what should be an independent institution may be viewed by the financial market as unsettling. Perhaps Mr. Trump relishes in his unpredictability. But the rise of uncertainty in the financial market will hold back corporate investment spending decisions. History says that economic dynamism thrives on the rule of law and not on whims of policy uncertainty. Institutions of law matter much more than any one person or a group of people.
4. Changes to Dodd-Frank financial regulation will occur in some form. A clear positive would be the lifting of compliance costs imposed on small-sized banks. Around 10,000 local and community banks have traditionally been the source of funding for construction and land development loans. With less regulatory burden, these small banks can make more loans and will boost home building activity – something that is needed in the current housing shortage situation. But changes to financial regulations on large banks like Goldman Sachs and Wells Fargo could again lead us back to the days of cowboy capitalism and consequent exposure to a massive taxpayer bailout.

Soruce: Forbes.com