The 2024 U.S. presidential election features a showdown between two prominent candidates with distinct policy platforms: Donald Trump, former President and Republican candidate, and Kamala Harris, current Vice President and Democratic candidate. Both have differing views on economic policies, housing initiatives, and tax laws that could significantly impact the residential real estate market for buyers, sellers, and investors. Here’s a breakdown of their proposed policies and how they may affect the housing market.
1. Tax Policies and Their Impact on Real Estate
Trump’s Proposed Tax Policies:
- Lowering Taxes for Investors: Trump is known for advocating tax cuts, particularly for high earners and investors. He aims to maintain or even expand favorable tax treatment for real estate investors, such as the 1031 exchange (which allows investors to defer paying capital gains taxes on property sales if they reinvest the proceeds into similar property). He has also hinted at reducing property and income taxes.
- Impact on Buyers and Sellers: Lower taxes on capital gains would encourage more real estate transactions, particularly from investors who benefit from flipping or rental properties. This could lead to an increase in supply, offering more options for buyers. Sellers could see more potential investors interested in their properties, especially in high-demand areas, as tax savings spur investment.
Harris’ Proposed Tax Policies:
- Higher Taxes on Wealthy and Capital Gains: Harris is likely to support raising taxes on higher-income earners and capital gains. Her policies would potentially limit or revise the 1031 exchange, which would affect investors’ ability to defer taxes. She has proposed increasing taxes on the wealthy, which would also impact high-end property owners and sellers.
- Impact on Buyers and Sellers: Increased capital gains taxes could slow down real estate investment, leading to fewer homes being flipped or sold by investors. Buyers could face higher property prices due to reduced inventory, while sellers might experience fewer offers, especially in luxury markets or areas dominated by investment properties. Investors may be hesitant to sell their properties due to heavier tax burdens.
2. Mortgage Rates and Economic Policy
Trump’s Approach to Interest Rates:
- Pressure on the Federal Reserve for Low Rates: Trump has historically advocated for low interest rates, even pressuring the Federal Reserve during his presidency to keep rates low to stimulate economic growth. He may adopt similar policies, pushing for lower rates in the housing market.
- Impact on Buyers and Sellers: Low interest rates would make mortgages more affordable for buyers, leading to increased demand for homes. This is a positive for sellers, who would benefit from a competitive market as more buyers can afford higher-priced homes. Buyers would enjoy lower monthly payments, but they might face increased competition and rising home prices due to higher demand.
Harris’ Approach to Interest Rates:
- Focus on Stabilizing Inflation: Harris’ administration is expected to support the Federal Reserve’s independence in controlling inflation. Her platform may prioritize controlling inflation over keeping interest rates artificially low. If inflation persists, mortgage rates could remain relatively high.
- Impact on Buyers and Sellers: Higher interest rates could slow down the housing market, as borrowing becomes more expensive. For buyers, this means higher mortgage payments and potentially less affordability, especially for first-time homebuyers. Sellers may find that homes sit on the market longer, as fewer buyers can afford the higher cost of borrowing, leading to softer price growth or even price declines in certain markets.
3. Affordable Housing & First-Time Homebuyer Programs
Trump’s Affordable Housing Policies:
- Private-Sector Solutions: Trump has generally favored private-sector-led solutions to affordable housing, such as tax incentives for developers to build affordable housing and reducing zoning restrictions to spur development. His administration was focused on deregulation and making it easier for developers to build.
- Impact on Buyers and Sellers: Private-sector-driven housing programs could increase the supply of affordable homes, benefiting first-time buyers or those looking for lower-priced homes. Sellers in the affordable housing market might face increased competition as more new homes are built, but the overall availability of affordable homes would grow, helping more buyers enter the market.
Harris’ Affordable Housing Policies:
- Government-Led Initiatives: Harris supports expanded federal funding for affordable housing, rent control, and programs for first-time homebuyers. Her platform includes measures such as tax credits for low-income renters and increased funding for public housing and community development block grants. She also supports federal-level rent control in urban areas.
- Impact on Buyers and Sellers: Buyers, especially first-time buyers and low-income families, could benefit from government-backed housing programs and assistance, making it easier to enter the market. However, rent control measures could deter investors from buying rental properties, reducing the supply of rental homes and leading to increased home prices in areas where demand remains strong. Sellers might see higher demand for entry-level homes as renters are incentivized to buy.
4. Environmental and Building Codes
Trump’s Environmental and Building Policies:
- Deregulation of Building Codes: Trump is likely to push for reducing environmental regulations and green building codes, focusing on cutting costs for developers and increasing housing supply. His administration has previously rolled back regulations related to environmental protections in real estate development.
- Impact on Buyers and Sellers: Easing regulations could lead to cheaper construction costs, spurring new developments, especially in suburban and rural areas. Buyers might benefit from more housing options at lower prices, while sellers in urban markets could face competition from new suburban developments as more affordable homes come onto the market.
Harris’ Environmental and Building Policies:
- Green Building Standards: Harris supports stricter environmental standards and green building initiatives. She advocates for increased federal incentives for sustainable and energy-efficient housing, promoting solar panels, and other eco-friendly upgrades. Her policies would likely emphasize environmentally responsible construction practices.
- Impact on Buyers and Sellers: While green homes may be more expensive to build, buyers could benefit from long-term savings in energy costs and government incentives for sustainable upgrades. Sellers who have invested in energy-efficient homes could see increased demand, but developers may face higher upfront costs, potentially leading to fewer new homes being built in the short term.
5. Infrastructure Investments and Community Development
Trump’s Infrastructure Policies:
- Suburban Expansion: Trump has historically focused on supporting suburban expansion through infrastructure projects like new highways and deregulation in development. His policies often favor suburban growth over urban development.
- Impact on Buyers and Sellers: Suburban areas could see a boost in home values as infrastructure improves and makes these areas more accessible. Sellers in suburban markets would benefit from increased demand, while buyers could enjoy more options in these expanding regions. However, urban areas might see a slowdown in demand if buyers shift toward suburban living.
Harris’ Infrastructure Policies:
- Urban Revitalization: Harris supports significant federal investments in urban infrastructure, affordable public transportation, and sustainable city development. Her policies prioritize revitalizing inner cities and improving access to housing, jobs, and public services in urban areas.
- Impact on Buyers and Sellers: Urban homeowners could see their property values rise as infrastructure improvements make city living more attractive. Sellers in cities would benefit from renewed demand as urban areas become more desirable. However, suburban markets might see slower growth as demand shifts back toward city living.
Conclusion: Impact on Buyers and Sellers
- For Buyers: Trump’s policies may offer more affordable homes through deregulation and lower taxes, while Harris’ plans focus on affordable housing programs and sustainability, potentially providing more support for first-time buyers but with higher regulatory hurdles for developers.
- For Sellers: Trump’s low-tax, low-regulation approach could stimulate demand, particularly in suburban and rural areas, making it easier to sell homes. Harris’ policies may increase demand in urban markets and green homes, but could also lead to higher taxes and reduced demand for high-end properties.
Both candidates’ proposed policies will shape the real estate market significantly, depending on your location, price point, and whether you’re buying or selling. Understanding these differences can help you make informed decisions as the election approaches. If you would like more information about buying, selling, or investing in Central Ohio, please reach out to us.
Kyle Alfriend has been active in real estate for over 35 years, assisting over 3,000 clients in buying, selling, and investing in real estate.
For more information on buying, selling, or investing, or for a personal consultation, contact Kyle Alfriend, (614) 395-1776, or info@AlfriendGroup.com Or go to our website, AlfriendGroup.com.