The hot commercial real estate and housing markets are heading into the final months of the year with a lot of momentum.
Will a surprise Trump win in the presidential election make investors and homebuyers take a step back?
“Thankfully our November elections come at one of the slowest time of the year for home sales, so I doubt we will see much disruption to the normal seasonal pattern,” says Jonathan Smoke, chief economist at Realtor.com. “However, one short-term risk could be If the outcome has a big impact to financial markets that lasts more than a few days, then we could see some disruption beyond the usual seasonal decline.
“Unfortunately we don’t have a comparable period in history with good data to draw any sharper conclusions,” Smoke said. “Remember that about half of voters got what they wanted. If this does impact purchases it is more likely to be in blue states and not the red heartland.”
James Gaines, chief economist at the Real Estate Center at Texas A&M University says he expects no short term changes in the Texas housing markets because of uncertainties created by the election. He’s more concerned about Federal Reserve actions that would hike finance costs and thinks a December rate hike is now more likely.
“The main result is greater uncertainty about future,” Gaines said. “Folks will either hunker down and do nothing or anticipate tougher times – i.e. higher interest rates – and try to move quicker to buy.”
Ralph McLaughlin, chief economist with Trulia.com, said the Trump effect on housing could be different across the nation.
“The shock of a Trump victory will be both a boon and drag on confidence of American homebuyers,” McLaughlin writes in a statement. “Homebuyers in economically healthy blue states will likely be rattled and more hesitant about the future the U.S. economy, which will curb their interest in making large investments.
“In economically stagnant red states, on the other hand, homebuyers will likely feel a surge of confidence that could bolster demand.”
Commercial real estate execs were already seeing some slight pullback this year.
But a surge of foreign capital coming into the market in North Texas and the U.S. has fueled more building buys.
“I would expect a short – very short pause – and then back to business as normal,” said Jeff Swope, who heads Dallas commercial real estate investor and developer Champion Partners. “The great news is that there is a businessman as president – should mean an opportunity to lessen some of the insane regulations being forced on businesses.”
Most investors don’t see a short-term change in the property markets.
“My personal view is that it will have relatively little near term impact on real estate transaction activity,” said Greg Kraus with Invesco Real Estate. “We can speculate on the longer term effects based upon his stated policies but believe it will come down to his first 100 days in office to really determine the impact of a Trump presidency on the real estate sector broadly.
“Areas I’ll be watching: Immigration policy and how it could effect construction labor, interest rates and trade policy on the logistics/industrial sector.”
Jack Crews in the Dallas office of commercial real estate firm JLL said there is uncertainty among the investors he talks with about what a Trump election means.
“But at the same time they feel that real estate in general is a good asset class and less volatile than the equity markets around the world right now,” Crews said. “Hard assets do well and when you look at the consumer or businesses that support the real estate most are in good shape with low amounts of cheap debt on their balance sheets and solid performance in their businesses.
“Dallas real estate is in good shape, provides good yields and very low risk to anything Trump may want to implement in his first year in office.”
Reposted from Dallas Morning News, Steve Brown, Real Estate Editor
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