Trepidation over Trump
Like it or not, a licensed real estate broker will soon be in the White House as commander in chief. Since the election, there has been much speculation about the future of our country but recent developments provide some insight into the future of the housing market. Soon to be President Trump has set the nation on its ear and the reaction has been wide and varied. The stock market plunged, then rallied and bond rates rose, affecting mortgage interest rates which followed suit. Mortgage rates follow loosely the yield on the 10-year Treasury bond.
With interest creeping higher, housing is bound to be affected, perhaps at first with a rush, then a wait-and-see attitude from prospective buyers. As we have reported continually here, home prices have been rising over the last several months largely due to a shortage of homes for sale in the lower price ranges. Our housing recovery from the feeding frenzy bubble has been driven in large part by historically low mortgage rates. A low rate means a lower payment which allowed prices to gain quickly. Nationally at least those increases rose faster than both income and employment growth.
Many say they did not expect the 4 percent mortgage rate we hit last week to happen until mid-year. Economists at the Mortgage Bankers Association are now predicting rates will, “trend higher than we had previously forecast, which will more quickly decrease refis (sic).” They still predict a strong home purchase loan market, but they say they will have to “assess the impact of policies as they are rolled out with respect to overall growth and housing market implications.”
One of the president-elect’s campaign promises included repeal of the Dodd-Frank Act which burdened banks with more regulations and drove up their costs associated with generating loans. A full repeal would do away with the Consumer Financial Protection Bureau and that causes concern for many. Actions by the CFPB have returned more than $11 billion to consumers including the recent refunds it ordered Wells Fargo to repay in addition to the $100 million fine for setting up bogus consumer accounts to win sales incentives.
Others fear a loosening of regulations will allow banks to return to subprime lending activities. Most agree this practice is to blame for the last housing bubble and will only lead to another.
Still others are concerned Trump’s immigration policies, although yet to be defined, are likely to have an impact to construction costs where large numbers of immigrants are employed in those home building crews. If Trump follows through on his hard-line stances on immigration, a shortage of construction workers may force builders to pay higher wages, and those costs are likely to get passed on to buyers.
No matter what changes come to real estate, you can be assured that your local Association of Realtors will provide our members with all the tools and latest analyses to keep them informed. As you hear new rumors and discussions, call your Realtor for their take on the matter.
Trust an expert….call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d’Alene Association of REALTORS®. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of REALTORS®, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling 208-667-0664