We're now less than six months away from the U.S. presidential election. That means things are about to get more interesting -- politically, financially, economically, and otherwise. Election campaigning will also soon increasingly dominate the news cycle, social media, and advertising.
As we inch closer to Tuesday, November 3, real estate investors everywhere are wondering: Will Trump win reelection? Or is it Joe Biden's time? And what consequences will the process and outcome have on the housing market?
The only certainty is uncertainty
Ask Greg Bond, a real estate investor in Maitland, Florida, and he'll tell you that election years invariably bring improbability to the market.
"This uncertainty is driven by the chance that someone will get elected who will have favorable policies around real estate investing or vice versa," says Bond, who predicts fewer overall property transactions over the next six months due to a cautious conservatism that creeps in with buyers, sellers, and investors before an election.
Ralph DiBugnara, president of New York City-headquartered Home Qualified, a digital resource for buyers, sellers, and Realtors, notes that election years historically affect two specific portions of the housing market the hardest -- which causes a trickle-down impact on the rest of the market.
"The first is interest rates; there is almost always a significant move in rates either going up or down, which can dramatically affect how people buy and sell real estate."
Considering that rates recently hit all-time lows, however, it's hard to imagine them going much lower.
"The other major area where we may see a change, particularly after the election, relates to taxes, including property taxes. Taxes could go up or down, depending on who wins in November," says DiBugnara.
If Trump wins
If Trump is reelected, many assume it would have a positive impact on real estate, given his close ties to the industry.
"I've noticed that, in election years that favor Republicans, there tends to be a resulting surge in the real estate industry. Following that surge, we may see an uptick in the stock market," says Ari Rastegar, CEO/Founder of Austin, Texas-based Rastegar Property Company, a real estate investment firm. "However, this is such a strange year and, therefore, will result in a strange election, making its impact difficult to anticipate. And external factors like COVID-19 lingering could upset any trends and predictions."
Others echo these thoughts.
"I believe there will be an uptick in the real estate market if Trump wins reelection, as his policies are more favorable toward investing and business in general," says Bond.
If Biden wins
Katsiaryna Bardos, associate professor of finance at Fairfield University in Fairfield, Connecticut, says Biden's prospects currently look good.
"His lead over Trump in the polls is outside the margin of error right now," she says. "His win would likely stimulate the market for starter homes and low-income rentals. Consider, too, that his platform includes tax credits for first-time buyers and down payment assistance for people like teachers and first responders."
All of these moves could lead to opportunities for savvy investors.
However, there's also the fear that Biden getting elected would result in increased taxes for some.
"From the foreign investor perspective, and no matter who will be sitting in the White House, U.S. real estate and America is seen as a strong protector for individual property rights compared with many countries around the world, and foreign purchases and demand are continuing at a fast pace for that reason," says Suzanne Hollander, a Miami Beach, Florida-based real estate attorney and Florida International University senior instructor.
Best moves to consider
Between now and the election, the experts recommend treading carefully and capitalizing on opportunities that exist.
"Look at refinancing your portfolio now that rates are at historical lows, and try to be as cash-flush as possible," suggests Bond. "Once the uncertainty of the election passes, there will be great buying prospects for those who have cash ready."
Indeed, cash will be king for a while to come.
"It's going to be harder, in general, this year to be an investor. You're probably going to need a larger down payment on properties -- up to 40% -- as well as strong proof of income and more documentation," cautions DiBugnara.
"Lending restrictions will cause distressed selling going into the election, and possibly more fire sales thereafter. It could be a very good time to pick up a property below market value for well-capitalized investors," DiBugnara adds.