From the White House to Your House

More votes were cast during the past season of American Idol than in the last presidential election.  Yet the decision about who occupies the White House for the next four years will affect your financial picture more significantly than the determination of which new celebrity possesses superior stage presence and iron-clad lungs, although those are probably qualities useful to the Presidency as well. The dust has yet to settle following the election, but industry experts are busily speculating how Obama’s reelection will affect the real estate market. Economic policies were the crux of many of the candidates’ debates, and Obama faces some significant challenges in bolstering the housing market. Although the President has not yet proposed a comprehensive plan for housing recovery and private mortgage lending, there are hints about the direction the White House may take, and whether you already own property or are in the market for a home, many of these policies may affect you directly.

As Obama takes the stage for act two, how does he intend to help the housing market? The current administration has emphasized the importance of expanding financing options for responsible homeowners and for helping families stay in their homes by preventing foreclosure. Obama intends to continue to develop opportunities in this area, supporting proposed legislation to ease the refinancing process and providing more options for loan modifications. The President has acknowledged the modest resurgence of the housing market, but grants that there is a long road ahead: “We’ve got historically low interest rates now, and the housing market is beginning to tick back up but it’s still not at all where it needs to be…We’re going to be pushing Congress to see if they can pass a refinancing bill.”

Another impending program is to commence government sales of some of the more than two hundred thousand foreclosed-upon homes owned by Freddie Mac, Fannie Mae and the FHA to convert these properties into rental housing. This proposal, one that was vocally supported by both presidential candidates, aims to raise home prices through converting vacant properties into healthy rentals, thus diminishing the number of foreclosures by raising home values. Restructuring of the giant government housing agencies, deemed unilaterally necessary by both candidates, will greatly influence the market and the price of real estate, both for lower priced housing that competes with affordable rental housing and the higher priced property sales that have lagged, partly because of lower limits for the size of mortgages that can be purchased and resold by such agencies. Movement in both of these categories is likely as the government takes steps to reorganize and regulate the mortgage industry.

Whether you responded to your favorite Presidential contestant’s election results with champagne or tears, indicators are positive that simply due to the increased stability provided by having elected our next leader, there will be an increase in market activity, at least in the short term. Many companies and investors, both domestic and international, typically delay decisions and postpone their economic involvement until after Presidential elections. Now that our leadership is settled for the next few years, companies can move forward with investments and curtail the wait-and-see attitude that tends to prevail pre-election.

Unlike reality shows, where audience applause is generally a reliable indicator of results, in this case, it is exceedingly difficult to predict what might happen to the housing market or to the nation’s economy as a whole over the next few years. However, at present, trends in housing appear positive, with low mortgage rates and the added stimulus of a newly settled (if not unified) nation. So if the news on the market has you in the market, contact me today at (925) 846-3755 and I will give you my insights about how to put this knowledge to work for you.