While almost every unknown issue that was of deep concern to home buyers on the sidelines has been answered, one issue remains: the upcoming election results. Who will be president? Who will control Congress and who will control the Senate? All three matter. But will this REALLY impact housing markets more than the FED? Not sure....
Political ideologies aside, what matters to most home buyers and sellers is how all three of these entities might impact inflation, spending, security and taxation. Would higher federal taxes result in more people seeking residency in low-tax states to offset this? Would lower corporate taxes fuel GDP growth or higher corporate taxes diminish corporate profits? Would more GDP growth, tariffs, spending, etc fuel inflation again? How will the elections impact home building? Will the SALT deduction limit be allowed to expire? Will pass-through entity tax breaks be eliminated? Will capital gains taxes rise or be lowered?
Realistically, even after the election results are in, it is tough to predict what legislation or policies will or won't be passed in governments where politicians are notoriously prone to promises that they either don't deliver or never had any intention of delivering. Many economists say a divided government forces politicians to be more practical than ideological and prevents any extreme shifts.
Either way, the two areas that buyers should focus on are:
1. The FED has entered a rate lowering mode. Mortgage rates are off their highs. Those waiting for 2% mortgage rates are delusional.
2. Housing inventory is still weak in many areas. Supply and demand always defines markets. While we're building more, most never address the fact that 200-300,000 homes are torn down each year in the US as housing ages, aside from storms, fires, earthquakes, etc: the average home in the US is 40 years old and that won't help.
Maybe more should focus on this math rather than all the theorizing?
