18 Nov The Trump Train is a’Rollin!
Time to take a look at the real estate market now that Trump is president-elect.
Although I have no crystal ball, I believe we are seeing some familiar and unpredictable markets ahead for the next 6 months.
The Good:
We saw an immediate consumer confidence boost in the industry and across all markets aka “the Trump Bump”. What I find as significant as the election is the team he’s creating and the fact that both House and Senate will be favorable to wholesale changes to the regulatory atmosphere. From NAHB Chairman Carl Harris. “With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments. This is reflected in a huge jump in builder sales expectations over the next six months.”
The Gooder:
If you’ve checked your public portfolios, you see the same Trump Bump we saw in the last term. That run from his last term, including COVID, the S&P500 grew 50%.. A lot of that money had to be re-distributed, and not much is safer than hard assets like real estate. We can expect to see the same in 2025, as they say, “they ain’t making any more land!” and I don’t see the federal government making new land available…yet.
The Question Mark
As most of us in this space do not see a significant drop in borrowing rates (maybe 5.5% in mid 2025…maybe), and those with 3% to 4% rates are certainly are NOT gonna sell (don’t blame them), it’s tough to see how growth will be shown. I forecast that first time homeownership age will increase until wages have matched growth compared to stocks and equity. For balance, I see second homes being purchased in 2025 at higher rates than the last 2 years. Hot and cold weather become less tolerable as you get older and you have the financial means to snowbird.
I predict that we will see residential and commercial real estate growth where we see local growth in manufacturing and utilities due to loosening of federal regulations and favorable borrowing environments. Those who over-regulate at local and state level will suffer. Nice weather is not enough to keep a family in your state, when 2 places that could cost less than the price of 1 is appealing…(I’m looking at you, California and Washington)
For individuals, start looking for that second residence…while it’s in decent supply. I recommend condo-style associations that can help maintain your asset if you plan to be there less than 3/4 of the year or hire a property manager, even if you’re there. You can keep your low rate mortgage on your first and rent out 6 months or short term vacation rental (depending on market and restrictions).
For investors, detached units in a condo-style developments is very appealing if you’re in one of the vacation zones. I see rapid growth for years in this market. Commercial is dicey for at least another year until consumer confidence bounces back and wages follow (depending on location). A lot of office and open-mall vacancies out there!
Whether or not you support this incoming administration, the Trump Train is leaving the station…get on board or get left behind!
