Key Point #1: Federal initiatives impact affordable housing
This sounds like a no-brainer, and the topic of affordable housing is so pervasive that it borders on cliché. However, with just 5-minutes of research, even the most casual real estate investor can agree that a basic understanding of federal policy can lead to a better-informed investing decision. Paying attention to the key groups in federal housing, as well as the initiatives they have in the pipeline, can help inform investors about the direction the market will move after the election.
Here are examples of a few departments, agencies, and government-sponsored enterprises that might be worth keeping an eye on as we approach November:
U.S. Department of Housing and Urban Development (HUD)
Federal Housing Administration (FHA)
Federal National Mortgage Association (“Fannie Mae”)
Federal Home Loan Mortgage Corporation (“Freddie Mac”)
Again, learning not just about these government bodies, but about the policies and initiatives they roll out, can help investors understand the impact of the election on the influence that these bodies will hold over the real estate industry.
Key Point #2: Understand your local economy
I live in Utah, which is home to some of the best skiing in the country, as well as the famous Park City, which hosts countless A-listers and celebrities during the world-renowned Sundance Film Festival every year. From the perspective of a Utah real estate investor, understanding the seasonal economy of Park City can give them a leg up and ensure their ability to make keen investing decisions. The kicker, however, is learning the connection between political turbulence and a city’s economy, and the resulting impact it will have on the city’s real estate landscape.
Take Miami, for example. Set on the sandy shores of sunny Florida, the sparkling city of Miami reaps economic benefits from tourism and international investment, paving the way for certain classes of real estate (such as the hospitality and industrial classes) to prosper. However, shifts in trade regulations, as well as alterations in immigration and travel policies, are just a few items on a long list that will be influenced by the outcome of the election, and these changes will inevitably ripple into the real estate market in Miami.
Investors need to learn what makes their local economies thrive. Even getting a general idea provides crucial knowledge that can help an investor connect the dots between their local economy and how it is impacted by the federal government, and ultimately lead to smarter investments that will thrive following the election.
Key Point #3: Money, Money, Money
Some cities rely on state and federal funding more than others. With the election in mind, investors can have better insight into how each presidential candidate’s platform will affect their city’s funding on a federal level. Yes, there are factors that sway the amount that a president will sign off for these funds, and yes, the paperwork for that funding finds its way to that huge desk in the Oval Office.
When a city receives these funds, it is up to the discretion of the local government to allocate those funds to the needs of the city, and one of the needs that investors would most be interested in is revitalization and rebuilding efforts. In 2021, under the American Rescue Plan Act (ARPA), the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program granted the city of Detroit a staggering $826 million, and the Detroit City Council determined the extent to which these funds would be used towards revitalization and rebuilding.
Taking a moment to see how cities receive funding, and the presidential voice behind the approval of such funds, can help investors prepare for the eventual real estate market changes following the election.
Conclusion
There is a multitude of significant changes pending the election that will impact the real estate industry. The hope is that whether it’s an investor who is just starting to enter the market, a seasoned mogul, or a research analyst that just got back from their evening walk, investors will do their due diligence from a political perspective to understand the effects of government on the real estate landscape, and leverage that knowledge to find success in the market.
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