ORLANDO — In the midst of a heated presidential campaign, Americans across all 50 states are being asked to absorb a huge number of questions facing the nation’s next commander in chief, from foreign policy to fighting terrorism to nominating Supreme Court justices and improving the economy.
That’s a lot of weighty issues to consider. But whether the nominations for president ultimately go to Donald Trump, Ted Cruz or John Kasich for the Republicans, or Hillary Clinton or Bernie Sanders for the Democrats, there’s another key issue that has been getting much less discussion on the campaign trail: How the next president could impact the real estate market.
In Central Florida, the real estate market is clearly on the upswing. The sale of homes is up, and so are prices. New developments are being built at a pace not seen since the last housing market boom in 2004-2006.
Orlando Real Estate expert An Flamand, owner and broker of An Flamand-Orlando Vacation Realty, said it’s important for all of the candidates to understand just how much the housing market’s recovery has helped the overall economy, and helped more people to become homeowners.
If, as some have predicted, the presidential candidates are Trump and Clinton, could an argument be made that one of them would be better for the long-term health of the housing market?
Or does the housing market’s fluctuations depend on factors that have little or nothing to do with who is president?
This is not a new issue. In fact, the future of the housing market was a critical issue in 2012, when President Barack Obama sought a second term and was challenged by Republican Mitt Romney. The housing market had gone into a steep nosedive in 2008, the year Obama was first elected, and struggled painfully to recover during his first term.
The two candidates offered a starkly different vision for the real estate market. In an article in The Washington Post on Aug. 31 2012, at the height of the campaign, writer Katherine Reynolds Lewis wrote that the candidates’ views of what role the federal government should play in assisting the housing market was very much an issue.
“Whether you prefer President Obama or Republican nominee Mitt Romney, there’s no denying that the next president’s economic and employment policies will be a key driver of the health of real estate for the next four years, not to mention the price of a mortgage,” Lewis wrote. “His policies will influence whether you can afford to buy a house or the amount of profit or loss you can expect from selling your house.”
As she noted, Obama favored federal programs to provide foreclosure relief by expanding opportunities for refinancing and loan modifications, and new legislation to make it easier to refinance mortgages.
Romney advocated the opposite: cutting federal regulations to make it easier for the private sector, particularly small financial institutions, to get back into the mortgage market.
One candidate looked to the federal government to provide relief, while the other preferred the federal government to get out of the way.
While the state of the real estate market was still a major topic in 2012, it’s less so today, with the market performing well in many states, including Florida. And with the unemployment rate at 4.9 percent nationally (and even lower in Central Florida), this year the candidates have spent more time talking about issues like fighting terrorism, income inequality and health care than real estate.
Still, there are plenty of professionals in the real estate industry who say the presidential race will not only impact the housing market once a new commander in chief is elected – but also impact sales this year.
Last September, The Wall Street Journal published an article by writer Adam Bonislawski, which asked whether an election could make it more difficult to sell a home. Bonislawski cited a paper published in 2014 in the British Journal of Political Science, which studied data from the real estate website Zillow.com. The journal studied housing sales during 73 U.S. gubernatorial elections in 35 states from 1999 to 2006.
“They found that in election years, homes sales declined between two-tenths and three-tenths of a percent,” Bonislawski wrote.
The report concluded that people searching for homes develop a reluctance to buy if they’re “unsure how an upcoming election will affect their financial fortunes,” Bonislawski wrote.
In other words, if people are anxious about whether the next president – say a President Trump or a President Clinton – will help or hurt the economy in their region, they might hold off on making such a major purchase and investment.
Whether that will hold true in 2016 isn’t clear, since both the economy and the housing market are on the upswing. And both leading candidates could plausibly make a claim that they fully understand the importance of the housing market. Trump, after all, made his fortune in the real estate market, while Clinton was First Lady in the 1990s when, under President Bill Clinton, the high tech boom dropped unemployment to 3 percent and the housing market soared.
Hillary Clinton’s campaign did issue an economic plan last month that includes a $25 billion housing investment program that aims to “lift more families into sustainable homeownership.” It would have the federal government offer down payment assistance, increase housing counseling programs, build more affordable rental housing, and clarify lending rules. The Clinton campaign said the investment is needed because of the way that skyrocketing rents have hurt many working families. The solution, her campaign added, is to lift barriers that prevent many families from becoming homeowners.
“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs,” the campaign noted. “And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time.”
So far, Trump has not laid out a detailed plan for the real estate market, and it’s unclear if he favors, as Romney did, a more market oriented approach.
But as many economists and political observers have noted, what the real estate market likes the least is the unpredictability. And if Donald Trump and Hillary Clinton are the major candidates this fall, both campaigns will both need to address a central question: whether their election will help keep the housing market on a healthy upward climb — or toss it into chaos.
Michael Freeman is an Orlando journalist, playwright and author of the book “Bloody Rabbit”. Contact him at Freelineorlando@gmail.com..