With growing uncertainty in the economy many are Americans are beginning to look toward the 2020 presidential elections to determine how the economy is going to look for the foreseeable future. As President Trump tries his best to continue the momentum we have had in the American economy over the last 10 years, there are many headwinds he is fighting against. The Reeves Team is constantly monitoring the market and is here to keep you informed on how it might affect your pocketbook.
The trade war has started to slow growth in the American economy and the stock market is lower now than it was a year ago at this time. The federal reserve has just recently started cutting rates again and we had the dreaded yield curve inversion. So what does this mean for the general public and their bottom line? When many people think about the economy they think about their largest investment. For the vast majority of Americans their biggest investment is the home they live in. So how will the Gilbert housing market be affected if Trump wins reelection or if a Democratic candidate wins in November of 2020. With the elections nearly a year away lets dive into some of the consequences that could be felt. Here are a few scenarios.
Rental Tax Credits
Most elections candidates are weary to talk about the housing market. People feel very passionate about their homes, for good reason, and don’t want to feel like the government is meddling in their largest investment. This election seems to be different. Many candidates have been discussing tax credits for both renters and buyers. If trump wins reelection in 2020 I would not expect much change, however some democratic candidates may mix up the status quo. Some candidates are trying to tackle the problem of ever increasing rent prices in the hottest markets in America. Gilbert rent prices have nearly doubled in the last decade, so Gilbert would certainly see some effect from these tax credits. Some of the proposals include giving a tax credit for families that are spending over 30% of their monthly income in rent. While this could be helpful in the short term proposals like this will probably only increase overall rent prices, as well as increase home values as well.
Home Buyer Tax Credits
Its no secret that millennials have shied away from purchasing homes, however as they settle down and start their families many of them are beginning to look at purchasing their first home. Unfortunately for millennials they home prices are higher, and they are straddled with more debt from college than previous generations. One area that is being looked at is renewing the first time home buyer credit. This was a credit that was put in place during the 2008 financial crisis and has recently expired. This type of home buying credit and other credits for home buyers and home owners could also help out the housing industry.
Given the historic crash in home values in 2008 it is remarkable that home valuations are within 6% of their all time highs even when adjusting for inflation. Given these lofty valuations if we do see a recession it is likely the market could dip. It is important to keep in mind that last time the recession was driven by sub prime lending and crazy housing valuations, that will not be the reason we go into recession this time. So if you are worried about a collapse in housing prices as big as last time you need not worry.
So what do you think about the possibilities of these tax credits? Are you for helping out those that are burndened by high home and rent prices? Or do you see 12 Santa Clauses on stage when you watch the debate, and think we should stop spending more government money on tax credits? Leave your thoughts in the comments section below.