22 Nov What does the Trump Victory Mean for Housing & Tax Policies?
If you’re wondering how the housing market, housing policy and taxes will be affected post-election, here’s a few key points:
Post-Election Housing Market Highlights
- Markets worldwide reacted to Trump’s victory, causing mortgage rates to rise. The reaction was to his proposed economic policies, not his political agenda.
- Initially markets were expected to react negatively to Trump’s win. Instead stocks rallied and bond yields skyrocketed on early belief that inflation will follow.
- The Fed is now overwhelmingly expected to raise policy rates at their December meeting. However, the Fed’s decisions have not failed to surprise in the past.
- Speculation abounds on the effect a new administration will have on the housing market. However, low rates and a strong labor market support improvement.
- Technology continues to advance on using 3-D for home tours. Realtor.com currently supports links to 3-D and is gearing up to integrate 3-D tours into its site.
- Construction job openings continue to rise as residential construction grows. Home builders have added 140,000 new jobs on a net basis in the last 12 months.
Trump’s Housing Policy Highlights
Trump said little about housing policy during his campaign. However, he proposed to loosen mortgage lending standards in a speech to the National Association of Home Builders (NAHB) in August.
“Twenty-five percent of the cost of a home is due to regulation,” Trump said, according to the NAHB. “I think we should get that down to about 2 percent.”
Of course, what presidential candidates say on the campaign trail and what they end up doing after winning don’t always match.
But in this scenario, banks could loosen lending standards and lower the credit scores required to qualify for mortgages. This would boost mortgage lending in the short term, and give more people a pillar of the American dream: homeownership.
Trump’s Proposed Tax Policies
The tax policies put forth during Trump’s campaign include several proposed changes that mainly impact the wealthy, including:
- The repeal of federal estate and gift taxes
- Reducing the corporate tax rate from 35% to 15% (one of the lowest rates in the world)
- A repeal of the 3.8% healthcare tax on net investment income affecting only those taxpayers with incomes over $200,000 (single filers) or $250,000 (joint filers)
Note — Trump’s original tax plan called for a 20% ceiling on capital gains. His most recent revised plan leaves capital gains rates as is in the current code, with the exception of the additional 3.8% healthcare surtax he plans to remove with the repeal or revision of the Affordable Care Act.