News over the weekend that former Vice President Joe Biden is now president-elect drew positive reactions from several real estate executives who saw the rise for the housing market.
Biden’s housing proposals include a $ 15,000 tax credit for the purchase of a first home and it will focus on fair housing and affordable housing issues. He is also likely to appoint a new head of the Federal Housing Finance Agency.
the National Association of Real Estate Agents Chief Economist Lawrence Yun told HousingWire that the $ 15,000 tax credit is good news because it can go a long way in helping first-time buyers and minority households. However, this is only part of the solution.
“But that’s not the whole story, the full story is that stimulating demand per se is, I think, insufficient,” Yun said. “Right now, the housing market is facing a significant housing shortage. So if we add new demand incentives without addressing supply… it will just drive prices up even higher. “
Yun said the current housing shortage is worsening and there is not enough housing being built to keep up with demand.
“We just haven’t built enough houses,” Yun said. “We also have to deal with the supply side, how to bring more supply? This is going to take a while, but simply adding more fuel to housing demand without meeting supply would simply mean that house prices could accelerate much higher and partially negate some of the benefits of housing credit. tax of $ 15,000.
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Whether or not a home can be bought is a matter of the portfolio, Yun said, and the homebuyers tax credit will have less of an impact than if there were a tax credit that also attempts to further stimulate housing construction.
“The challenges are [for] people who are renters and are just frustrated that their American dream is spiraling out of control, ”Yun said. “This $ 15,000 will definitely help potential future buyers, and the only way to have an impact is to make sure we have a sufficient supply available as we approach 2021.”
Keller williams Chief Economist Ruben Gonzalez viewed abstention as a critical issue for the Biden administration in 2021. The terms of abstention going forward will need to be addressed as the deadlines created in the CARES Act approach, which includes helping people still unemployed, Gonzalez said.
“A new, federally-led approach to regaining control of the spread of COVID-19 also appears imminent in January, and successfully bringing the pandemic under control in 2021 will be a key to returning the economy to its full capacity,” said Gonzalez.
Biden also said he wanted to distribute $ 640 billion in housing funds over a 10-year period to address issues such as redlining, increasing housing supply, increasing energy efficiency. and more.
“It is too early to comment on the new tax policy given the likelihood of a Republican-led Senate; However, if we see a new tax policy and a new environmental policy attached to it, we might see tax benefits that allow homeowners to improve the energy efficiency of their homes again under President Biden, ”Gonzalez said. .
Ken H. Johnson, a real estate economist at Florida Atlantic University, told HousingWire that a Biden presidency would come with a bigger stimulus and there could also be more money spent on the concept of security.
“[A stimulus] is very important if we are to support this market, ”Johnson said. “You’re going to need the stimulus or our rates will go up. If tomorrow they said “no stimulus”, you would see the rates go up. “
Johnson said he believed there was will not be a real estate crash. Record rates would prevent the housing market from collapsing because “we’re near the top of the housing cycle, and it should peak and maybe even stagnate … this end-of-cycle acceleration happened because we saw these near-record low rates.
“There will remain a desire to own as long as interest rates stay low,” Johnson said. “Interest rates will stay low as long as there is a financial stimulus to come.”
Ahead of the publication of the election results, HousingWire spoke with Jeff Holzmann, CEO of IIRR management services, a real estate crowdfunding company. Holzmann said the important things to come out of this election will be an additional stimulus package, which will have a direct impact on tenants.
“The reality is that the first CARES law was monumental in terms of helping the economy and helping residents who rent, especially in the multi-family category,” Holzmann said.
In terms of abstentions offered by Fannie Mae and Freddie mac, Holzmann said it is a good thing that GSEs “provide capital and come up with relaxed measures to make sure people don’t [get] crashed and fail under the pressure of COVID. “