The political landscape was turned on its head in November surprising prognosticators and pollsters alike. With the 2016 election in the rear-view mirror, we now turn our focus to the future of housing. On a national level, the election of Donald Trump should be a positive for housing. After all, he started off as a home builder. I met the President Elect in Miami and he spoke about his upbringing as a child of a home builder. He spoke fondly of how he learned to negotiate by hearing his father barter with contractors. This softer-spoken Trump struck a chord with many of the builders in the room that day. One thing we learned about Trump is that he gets employment and believes in construction and it’s impact on the economy. I believe he will sign into law pro-housing and pro-development laws, which will benefit our industry.
Trump’s proposed tax cuts on businesses and trade policies should increase business and hopefully bring more manufacturing back to the United States. Raising our GDP growth to more than 1% annual is necessary for a healthy economy. This should, in turn bring jobs. Jobs and wage growth always help increase the demand for housing. Currently housing accounts for over 15% of the nations GDP. In addition to corporate tax cuts, if tax reductions on individuals go through, we will see working families with more disposable incomes. This additional income will be put back into the economy in the form of cars, homes, personal property, and other purchases people have had a pent up demand for.
In order to promote housing further I expect Trump to take a hard look at some government agencies such as the Department of Labor, OSHA, EPA, and DNR. During the previous administration staffing increased, as did cumbersome regulation such as the overtime rules, waters of USA, silica regulations, confined spaces laws to name a few. These rules have had an adverse impact on the cost of new housing. According to a recent NAHB study the cost of local, State, and Federal laws added a staggering $84,671 to the cost of a new home in 2015! The Affordable Care Act will also be redone and should lower employer insurance cost for their workers. I expect many of these laws to be eliminated or pared back to keep housing more affordable in the future.
What might be the biggest boon for housing is not what the President will do, but the fact that we no longer have uncertainty over who will be our next President, this typically depresses the housing market during Presidential election years. Consumers hold off on big-ticket purchases such as homes until they know the policies for the next 4 years. Well, this all adds up to a bullish outlook on housing for the next few years.