Donald Trump shocked the world on Tuesday when he became the 45th President of the United States by a landslide. The voice of middle America and the South was heard loud and clear. Whether you like him or not, having a mega-real estate tycoon in the Oval Office will have a “huuuuge” impact on our industry.
Trump never agreed to a peaceful transition of power, and apparently, neither did some of his opponents. Thousands of protesters have been marching the streets the last 3 days.
In Portland, it started out peacefully with about 4000 protestors, but quickly turned violent. Local businesses were vandalized, cars were damaged, and objects were thrown at police officers.
Trump hasn’t even taken office yet, and real estate has already been affected.
Oakland has not fared much better. Freeways have been shut down with protestors blocking cars from passing, which seems more like a suicide attempt than a march for justice and peace.
In LA, protestors also blocked roads, vandalized and threw rocks at bottles at police officers.
Unfortunately, this may be only the beginning of what could be the releasing of deep seated anger and resentment – clearly a direct result of a bully campaign that got an outsider in to the most powerful position in the world.
It’s not a time to be fearful, but certainly a time to be aware – especially if you have something to lose… And as investors you probably do. If you own commercial property downtown, for example, make sure you have proper insurance for potential riots.
Another big concern when it comes to real estate is the possibility of interest rates making a giant u-turn.
According to MarketWatch, some analysts are projecting a big jump in interest rates.
Trump plans to reduce regulations, including unraveling Dodd-Frank, dismantling Obama-care, and increasing trade protectionism. If he succeeds, it could be good for the economy and stocks, but could increase inflation.
If imports are taxed, they will be more expensive for Americans, which would increase inflation. If jobs are brought back to the US as a result, we would have to pay more for American labor, and prices would soar.
Inflation could cause the Fed to raise interest rates to try to slow it down.
In anticipation of inflation, bond prices tumbled this week, sending the 10 year US Treasury note above 2% for the first time in 9 months. As a result, mortgage rates increased a quarter percent. This trend could continue so if you were planning on using financing to buy property, this would be a good time to lock in rates.
Also, in high priced markets that are already testing the affordability limits, higher mortgage rates could be devastating. If you were planning on cashing in on your bubble property, now would be a good time.
Additionally, if you own property near a border town, there could be consequences. If Trump moves forward with building a wall, real estate in border towns could boom during construction, but would likely bust soon afterwards. Building a wall could also result in a shortage of building materials for other developments and builders.
A further hardship on builders would be if Trump sends undocumented workers out of the country. Builders will have an even more difficult time finding laborers, when there are already 200,000 unfilled construction jobs right now.
It’s more important than ever to pay attention to the changes in America, and we’ll help you do that. Be sure to subscribe to my Real Estate News podcast for daily updates.
Hopefully you can attend our upcoming live event, where we’ll be profiling one city that is sure to boom during a Trump administration.
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