31 Oct How Might Elections Impact Real Estate
How might the elections impact real estate?
First, let us discuss the Federal reserve and interest rates
1. The Federal reserve controls the interest rate they charge banks to loan them money. This has a direct correlation to mortgages and interest rates charged to consumers. The spread between the two numbers right now is higher than the norm in so banks are profiting from the added difference. The latest comments from the Federal Reserve officials say they are expected to leave the interest rates on funds they borrowed to banks at zero. They are expected to do this in 2023 to try to coax the economy back to full strength after the pandemic-induced recession. So, the election should have no effect on interest rates.
2. Will refi’s still be going on this winter and next year at this crazy pace? Yes, the elections will not impact that. But it will slow because so many have done it and the numbers who would qualify are starting to
diminish. This will help home buyers because days to needed to close will be reduced as volume of refi’s begins to wane. Banks will then be more focused on providing better service and options to home buyers.
3. Will the elections impact the inventory of homes for sale? No, but the pandemic will. Evictions and foreclosures are on hold, but that period will expire. The furlough costs also add up for mortgage holders so more homes will come on the market in the spring from the unfortunate need to sell because of job losses and financial duress.
4. Will the election affect fiscal policy? Yes, regardless of who wins our fiscal policy will change. Our deficit this year will exceed 3 trillion and at some point in time we need to “pay the piper”. Taxes must increase, and some services must diminish. The interest amount our country pays on just the debt each year is now almost $450 billion.
In conclusion, the election will not impact our housing market or the interest rates. The pandemic, job loses, and the level of our national debt will.
Look for more articles and videos in the future on different aspects of real estate.
Real estate is a wonderful investment!