There is a lot at stake in this wildly contested Presidential Election. With such serious topics as; COVID, climate, immigration, the economy and housing, partisan approaches to housing and the inclusion or exclusion of congressional support can dictate different directions we could be heading.
Certainly at the top of investor’s minds is the Biden proposed elimination of the like kind exchange provision, tax code section 1031. Repercussions of eliminating the 1031 exchange could have far-reaching effects on commercial real estate markets that already are suffering due to COVID-19. There could be a decrease in real estate investment and development. Trump supporters claim that Biden’s proposal is political and aimed towards the President and his family, who are fixtures in the real estate industry, and Biden supporters claim it provides a much-needed source of funding that would not hurt the middle class.
With a historic shortage of affordably priced rentals and homes for sale, how each candidate would approach this crisis could have lasting implications for years to come. Let's take a look at where each Presidential Candidate is focused on providing solutions for the housing crisis.
According to National Association of Home Builders CEO Jerry Howard “If President Trump is re-elected, I believe you’ll see him continue to try and deregulate all businesses in industries including housing, and that will help us build housing” “I think that our builders are more inclined to believe that President Trump will be better for them in that regard, but it really remains to be seen.”
Although unlike his challenger, President hasn’t released a housing plan, but we can look at what he has done in office or proposed budgets thus far as an indicator of what is to come;
- Eviction moratorium to prevent renters from losing their homes during the pandemic
- Scrapping a law that required suburbs to address racial discrimiation in housing.
- Deep HUD cuts
- Movement towards privatizing Fannie Mae and Freddi Mac, with potential affect for generations.
- Capped property, income and sales tax deductions at up to $10,000.
- Lowered the mortgage interest deduction.
- Opportunity Zones
Presidential Candidate former Vice President Joe Biden has outlined a plan that focuses on disparities and creating national standards. “When voters make a decision in November, the choices are largely preserving the status quo in the housing market versus expanding opportunities for minorities, low-income and lower middle-class households," says realtor.com®'s chief economist, Danielle Hale. "Biden is looking at how to increase opportunities for homeownership and affordable rentals," adds Hale. "[His plan] is targeted at the people who need the most help."
Highlights from Biden’s proposed plan face two distinct obstacles, passing through Congress and having the funds to support the plans.
- First-time home buyers with a down payment tax credit of up to $15,000
- Creating a national standard for appraising homes to make sure properties in communities of colors wouldn't be assessed at less than similar homes in comparable white neighborhoods.
- Fully fund Section 8 vouchers so that every low-income American who qualifies for the program would receive the assistance. Currently, about a quarter of households eligible for the vouchers don't receive them because there aren't enough to go around.
- Creating a public credit agency that would help raise the scores of minority home buyers by considering things like rental payment histories and utility bills paid on time
Possibly by print we will have election resolution and will know what direction the real estate and real estate investment market will go. Either way it is always good to know what those changes are and how we can prepare for them.