What's in the Near Future for Real Estate?

What's in the Near Future for Real Estate?

A new article over at Realtor Magazine starts this way: “We can expect a hot year in home sales in 2017, …” This got me to thinking, and I had to dig into current events a bit in addition to market forces.  Some points in the article:

·     Existing home sales to hit 6 million in sales this year.

·     Fannie Mae and Freddie Mac are more upbeat, predicting 6.2 million sales.

·     New home starts are expected to tick up a bit to 1.5 million/year to 2024.

When it comes to current events, I have to give serious consideration to the presidential election. Opinions are like… well, you know, everybody has one. Mine is that nothing really major is going to happen until a while after the election. “A while” has two different meanings based on which party is elected.

Democratic President

Of course, what politicians say during the elections is suspect, but generally the consensus is that electing another Democrat will continue many if not all of the economic policies of the past 8 years. Plus, we’ve heard that the Democratic candidate intends to raise taxes, almost across the board. This of course will not put a lot of excitement into buying a home and adding real estate taxes to higher federal taxes.

Should our next president be a Democrat and these statements prove mostly accurate, we’re not going to see a major surge in buying, in my opinion, for 4 to 8 more years. This bodes well for rental property investors and wholesalers who feed them properties. More renters, higher rental demand and higher rents will keep us on our current roll.

Republican President

This one is a wildcard sort of thing. If the transformation as touted in campaign rhetoric actually partly or mostly happens, the economy should respond positively with jobs and higher wages. This will spur home buying.

However, even if these reforms are enacted, we’re probably looking at two or more years before they begin to really change people’s economic lives. However, they could get excited about the coming better times and tick up home buying a bit in the first couple of years after the election.

Should buying pick up quickly, this doesn’t necessarily mean tough times for rental properties and investors. It could be a time to roll some of your properties with 1031 Exchanges into another price range home or possibly into multi-family or commercial properties.

Sometimes I get a bit cynical about the National Association of Realtors? ads that always say “It’s a great time to buy a home.” But, when I think about it, I can’t really think of a time when it hasn’t been a “great time to invest in real estate.” The difference is that the retail buyer is trapped in a single strategy situation with risk factors they can’t control. Will they keep their jobs? Will their home rise in value? 

The real estate investor can choose from several strategies, each with different market exposure. They can make money when markets rise, fall or sit still.


Sean Liu

Operations Research and Systems Analyst @ US Army (CIO)

6 年

Shared economy and leveraging other tools outside of Airbnb to extract the most value out of each hard and soft asset that rests on top of the land.

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I mostly agree with you Sir Dean. However, and now that the election is mostly behind us in real terms, be it President Elect Trump, or had it been Hillary Clinton, the tax plans at hand are both somewhat off the mark from my point of view, and that of the reality of the global economy. How we as America play it will determine much of our near future, but it is here to stay. Here's the reasoning: Raising Taxes by Clinton, or had it been Sanders, would be futile! When we follow the actual money worldwide, it follows tax reduction/tax evasions strategies. Very few corp's actually pay the corporate rate. Actually, the numbers show that few even pay the most accepted "fair" rate of 24% to 26%. Most pay way under 20% and the 12% to 15% range is somewhat the norm. So raising the rate or lowering it officially by the new President Elect works against a simple reality: IF all the world's corp's were forced to pay equally, the equivalent of 24% to 26% to their host countries, almost every western country on this planet would have a boost in their general funds revenues. In America, that is an annual $ 6 trillion without raising taxes. What does that mean? We could effective "reset" what our income evaluation ranges are, then plan according, and more effectively attack income disparity. How does this work? Simple put, we can lower the general tax rate to individuals to almost nothing, all the way up to the "real and effective" buying power of the "real middle class" whose low should be about $$79,000 per year for an individual, about $125,000 for a couple. The tops for a couple would be in the neighborhood of $330,000 per year. That is the actual buying/purchasing power of the middle class in about 1978/79. Purchasing Power is the rightful verbiage when considering the middle class, not the numbers. Both political parties don't have it right because each has an agenda. Yet, this is where the world - and America, is heading! President Obama, after the last G-20 meeting signed the 3rd agreement between nations, as they all are cooperating towards disclosing what each corporation is making in real revenues in their countries, and will report it to the host countries, starting now, this year, ending Dec. 31, 2016. Now. Apple or anybody else is keeping cash over seas because back when NAFTA was enacted, the Republicans' started to "protect" our markets. This pissed off the Japanese who then retaliated, due to the tariffs, and took America to the World Court, saying that our Foreign Sales Corporations (FSC's; I loved these little suckers!) were illegal, and won. So now, if you made money over seas anywhere, when you repatriated the money into the American Currency, the Dollar, you only paid 2% tax on it. So, with that gone, you end up actually double taxed! Now, we have the mess we have. This also gets fixed IF YOU KNOW THAT THE TAX YOU ARE GOING TO PAY IS A SET AMOUNT EQUALLY, AND YOU CAN'T TRANSFER YOUR MONEY AROUND THE WORLD TO BEAT THE RATE; NO DEDUCTIONS. YOU INVEST FOR THE RIGHT REASON, OF GOOD LABOR FORCE, ETC... And are forced to then compete equally. So, the tax debate is actually just a waste of time and an anachronism. If President Elect Trump "doesn't get it" as he gets transitioned, we're screwed in the short term. The Real Estate Markets need stability. That is when they thrive. What is in favor of investors during one cycle, will only favor the same investors in another cycle, because people like you will continue to show us the way to thrive with the punches... That is where it is all going. And by the way, with the above changes, within about two years, all the worlds deficits just go away. Remember, they are paper positions. This is what is known as Quantum Economics. The math hold up. Have a nice day :-)

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Susan Boyd

IMA Independent Marketing Affiliate at Renatus

8 年

The actress is good on the NAR advertisements so are the ideas like puppies, hot tubs and BIG closets. Crushing it!

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