How will the election impact Reno and Sparks real estate
Those of you that know me well know that I absolutely loath talking politics. I could write a book about why I can’t stand talking politics, however, one of the few things I dislike more than talking politics is explaining why I dislike talking politics. Let’s just get into the issues and what we can expect from either side.
The market under Trump
We already have a taste of what President Trump will do/has done for housing and honestly, from this chair behind this desk, the market couldn’t be stronger (sans The Rona, that is). Home prices are skyrocketing, interest rates can’t get much lower, stringent lending policies are keeping buyers from overspending, and the 1031 tax deferment program is helping investors grow their portfolios. HOWEVER! There is a flip side to that coin. With home prices where they are and where they are going, it is getting more difficult than ever to afford to buy or even rent a PLACE TO LIVE! This is a HUGE piece of what leads to the system racism we are seeing across the nation. I hope we can all agree this is not okay and needs to change.
What it could look like under Biden..
On the other side of the isle, we can only assume Biden’s plans will not stray too far from what he and Obama were working on 4 years ago. For those in the back of the class, he will most likely focus on affordable housing and fair housing rules. He will most likely reenact Affirmatively Furthering Fair Housing (AFFH) rule. You can read more about it in the article below, but it’s basically an attempt to give municipalities federal greenbacks to assist in the cost to bring more affordable housing to those municipalities that submit an action plan and jump through a couple more hoops. His administration will most likely also attempt to expand section 8 vouchers as well as fight for more multi-family zoning and fewer single-family zoning. Biden’s plan is to throw $640 billion over 10 years at these items. We don’t yet know where that $640 billion is coming from, but there are rumors that he might do away with the 1031 exchange tax deferment for investors making over $400k a year. I don’t have any idea how many tax dollars we are talking about within the investment market, but I bet it’s a pretty large number.
While Biden’s plan sounds great, there are some holes in it that hopefully his team is working to fill. For example, the AFFH rule looks great on the surface; however, it’s come to light that municipalities across the country were so bogged down with the red tape that most of the attempts to get funding for affordable housing fell short. Changing zoning and fighting for fewer single-family zones (this is just my understanding here) will also be an uphill battle. In my opinion we need more of both… supply and demand, homie. Another hurdle he might have in front of him is the 1031 tax deferment. I would imagine the investors that make over $400k/year (this is a huge group of people) will not let this go without a fight. Also with how the senate is playing out, this might be a tough one to get through… and if it doesn’t… where is this money coming from?
Hopefully I explained that well enough so you can see just how vastly different these two plans are. Honestly, I have serious doubts about both. The rate at which we are seeing home prices escalate is not sustainable. The cost to hire tradesmen and contractors is getting a little out of hand and that combined with the price of lumber right now is making it tough for anyone to build what they want, whether it be single family OR multi-family affordable housing units. I know I’m not smart enough to figure out what needs to be done, but that’s why we vote for people that are smarter tha… ehhh… well… we need smarter people is what it comes down to (I think we can all laugh at that).
If you REALLY want to crack this political conversation open with me… swing by with a sixer of cold Coors Light and we can talk it out for a length of 3 beers a piece. **Disclaimer: Talk fast; I can absolutely smash through Coors Light.
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