A few of you have shared with me your plans of purchasing property in 2017. Furthermore, you have been asking me if given the political climate we currently are in, it would be wise to buy a home.
Let’s explore if it is indeed a good idea to buy property right now.
Currently, Although home construction has surged by 25% since September, the two biggest issues our market is facing are: supply constraints (we do not that much inventory AKA available homes) and credit availability. However, under the Trump Administration, these are the real issues:
Higher Interest Rates
Republicans have been very outspoken about reducing the role of the federal government in the housing market. According to them, this will prevent taxpayers to be responsible for another bailout. If they lobby and succeed, this action alone will raise interest rates simply because when the government is involved in the housing market, interest rates go down. Now, higher interest rates mean: larger monthly payments and a lesser number of loan qualifications. This challenge translates into lenders not qualifying many borrowers and less homes being purchased.
If Trump keeps deporting immigrants and continues with his plan of building his wall, many construction workers will flee the country. Contractors will have a hard time securing qualified workers and labor costs will hit the roof. So will home prices.
Who are we kidding? Inflation will likely kick in. It is not unusual for a Republican Administration to bring financial stagnation and a dent in real estate. These scenarios have taken place under the last 5 Republican Administrations.
This is what I would do
If you had already made plans to purchase a home in 2017, I would pay attention to two things in the first semester: Tax cuts (especially to the 1%) and big government spending (e.g. infrastructure such as the wall or if Trump led us into a war). These two issues will be a tremendous challenge for the regular consumer.
I would buy property up until June. We can’t really anticipate the entire financial impact that the Trump Administration will have on our country; therefore, I would be very cautious about purchasing property in the second semester and for the next four years, for that matter.
Did you miss my interview with 360Karma? Check it out HERE.