Market Mastery November 20, 2024

How the 2024 U.S. Elections Could Impact Real Estate in 2025

The U.S. presidential election is not just a political event—it’s a pivotal moment that influences industries across the board, including real estate. As we look ahead to 2025, the outcomes of the 2024 elections will shape housing markets, interest rates, and investment strategies in profound ways. Let’s take a closer look at potential scenarios and what buyers, sellers, and investors should consider.

  1. Interest Rates and Monetary Policy

The Federal Reserve plays a vital role in determining interest rates, and the policies of the next administration could influence its approach.

  • Potential Impacts:
    • A government focused on economic stimulus may advocate for lower interest rates, potentially making mortgages more affordable in 2025.
    • Conversely, inflation control measures could lead to higher rates, which might, and typically does, dampen home-buying activity.

What to Watch: Monitor the President Elects stance and decisions on fiscal policy, as these will provide clues about the direction of the economy.

  1. Housing Affordability Initiatives

Housing affordability remains a key concern for many Americans. Policies aimed at expanding affordable housing or increasing homeownership could affect supply and demand dynamics.

  • Potential Impacts:
    • Expanded tax credits or subsidies for first-time buyers could spur demand, particularly in urban areas.
    • Policies incentivizing new construction might ease inventory shortages, especially in high-demand regions.

What to Watch: Pay attention to proposed measures around zoning laws, housing vouchers, and federal support for affordable housing projects.

  1. Tax Policies on Real Estate

Tax legislation significantly impacts real estate investments. From property tax deductions to capital gains tax rates, these policies often shape buying and selling decisions.

  • Potential Impacts:
    • A reduction in property tax deductions or increased taxes on investment properties might discourage high-end purchases.
    • Incentives for renewable energy upgrades in homes could boost demand for green properties.

What to Watch: Look for proposals that address 1031 exchanges or changes to mortgage interest deductions.

  1. Economic Growth and Employment Trends

The administration’s focus on job creation and economic growth will influence where people move and settle.

  • Potential Impacts:
    • Infrastructure projects could boost real estate in underdeveloped areas, creating new hubs for growth.
    • A thriving job market may lead to increased demand for housing, while an economic slowdown could have the opposite effect.

What to Watch: Pay close attention to investment in technology, manufacturing, and urban development.

  1. Environmental Regulations and Their Effects

Real estate developers and investors are increasingly impacted by environmental regulations, particularly those aimed at addressing climate change.

  • Potential Impacts:
    • Stricter building codes and green energy mandates could raise construction costs but add long-term value to properties.
    • Floodplain regulations or insurance changes could shift demand away from high-risk areas.

What to Watch: Examine the President Elects position on climate policies and their potential implications on real estate markets.

Key Takeaways for Buyers, Sellers, and Investors

The 2024 U.S. elections will undoubtedly influence the trajectory of the real estate market in 2025. To prepare:

  • Buyers: Keep an eye on interest rate trends and policies that could impact housing affordability.
  • Sellers: Consider timing your sale strategically, especially if tax policy changes might affect profits.
  • Investors: Monitor regulations and incentives that could create opportunities or challenges for your portfolio.

While no one can predict the decisions of any sitting President, or President Elect, staying informed and proactive is the best way to navigate the evolving real estate landscape.

What’s Your Next Move?
Whether you’re looking to buy your dream home or expand your investment portfolio, understanding how political shifts affect real estate is crucial. Connect with a knowledgeable real estate professional to guide you through these uncertain times.