What Trump’s Victory Means For Real Estate
Yeah, it’s not good. But time will tell if Mr. Trump follows through on his campaign promises.
You’d think having a real estate tycoon in the White House would be good for the US property market, wouldn’t you? Well, it may, but it could also be cataclysmic. Firstly, let’s forget all the promises Trump made while getting elected. If his track record is anything to go by, his promises don’t mean much. Instead, he’ll surround himself with neo-cons much like George W. Bush did and we all know what happened to the economy when he was in power.
The bottom line is that the country and the world is in shock and the financial world doesn’t respond well to shock. The stock market tanked with the Dow plunging by 800 points but has rallied somewhat since the initial result. If the dollar stays low, foreign investment will more than likely flood in and inflate high end real estate. But if Trump fails to convince the world as to the country’s stability, foreign investors may choose to park their cash elsewhere. If the Brexit vote is anything to go by, American real estate values will drop across the board. All markets favor stability and the general conception is that if an unpredictable captain is steering the ship, investors will prefer to keep their cash in their pockets.
If Trumps deregulates Wall St. as is the Republican ethos with trickledown economics, lending may skyrocket in the short term, increasing prices and making mortgages easier to come by, especially if the Fed keeps rates low, which they may be likely to do in the short term. In the long term, if history has taught us anything, it doesn’t bode well when the market corrects itself.
Trickledown economics is fine in theory but in reality it doesn’t work. The people at the top benefit from the tax breaks whereas the middle and working class usually suffer. The irony is, of course, that it was the working class that voted Trump into power. If he fails to bring the manufacturing jobs to their communities which he promised and benefits are cut, then we could be heading for massive foreclosures in impoverished communities again.
The big unknown is war. “I’ll bomb the sh*t out of them,” Trump famously said about ISIS. War is a killer for the economy. If Trump, a known reactionary, is baited into violence, then all bets are off, especially if terrorism increases in the US.
The hope, of course, is that Trump will do something good. By all accounts, despite huge losses in the past he has some profitable properties and has run his company for many years. Clearly there is some understanding of business, of profit and loss. But running a country is very different from running a private business. We can only hope he has a strong team of advisors.
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