Donald Trump is the President-elect. How will his presidency impact the East Bay real estate market?
Donald Trump will become President in January. That said, what effects might his presidency have on the East Bay housing market?
Interest rates have gone up 0.5% since the election ended. That is a pretty big jump. Considering that the average loan amount is $700,000, a 0.5% increase means a $200 increase in your monthly mortgage payments. Janet Yellen is the head of the Federal Reserve, and she determines when mortgage rates are raised or lowered. We have seen very gradual increases, but there may be more pressure from a Trump Presidency for Yellen to increase those mortgage interest rates over the long term. As rates go up, affordability will go down.
The large sell-off in tech stocks will impact a lot of buyers. Many people in the East Bay work in the tech sectors, so as people sell off tech stocks in order to invest in other things that may do better under a Trump Presidency, that may impact people’s ability to purchase real estate in the East Bay.
Demand may change in regards to undocumented immigrants. Most undocumented immigrants who work here in the East Bay are renting apartments until they become documented citizens. If these people end up leaving the United States (of their own accord or due to new immigration policies) and fewer immigrants come into the United States, we could see a lot of vacancies in those apartments. There has been a large push by builders to continue to build high-density housing, so as we see more vacancies, that could impact the housing market. Rental rates will also drop, causing more people to rent rather than buy a home. Since buyer demand will drop, home prices will go up, further affecting affordability.
Rescinding mortgage restriction programs, like Dodd-Frank, could actually have a reverse effect and increase affordability. Getting rid of some of those programs could provide more loan programs because there would be less regulation for financial institutions.
There are a lot of factors at play, so it’s hard to say exactly how Trump will affect the real estate market. I definitely think that interest rates will go up soon. We are nearing a peak in the market, so if you are thinking about making a move, now could be the time.
If you have any questions, please don’t hesitate to give me a call or send me an email. I would be happy to help you!