Wow, what a whirlwind presidential election season!
No matter which side of the political spectrum you’re on, the fact is that Joe Biden’s presidency will have effects on the real estate industry. Some of those will be positive and some negative, but in any case, the best plan is to know what those effects are and be prepared.
In this blog post, we’ll be looking at Biden’s proposed plans concerning real estate and discuss the pros and cons of each.
How Biden’s Presidency Could Affect Real Estate
President-elect Joe Biden made a promise during his campaign to help more Americans achieve homeownership. His housing plan addresses this goal from several different angles.
Tax Credit for First-Time Homebuyers
Part of Biden’s housing plan includes a tax credit of $15,000 on down payments for first-time homebuyers. For home flippers, this is a big win, as it gives more people the opportunity to purchase homes they’re selling.
- Help make purchasing a home more accessible to lower-income families.
- Available to borrowers at the time of purchase.
- Could potentially be used as leverage in the home-purchasing process, driving up home prices.
- The housing supply is currently low and housing prices are already high
Assistance for Struggling Renters
Biden’s plan intends to fund Section 8 vouchers, which assist in paying for living expenses to low-income Americans who qualify. Currently, only about 25% of qualifying Americans receive these vouchers due to a lack of funds in the program. For those with long-term rental properties, this program could help sustain renters, bringing down the risk for landlords.
- Adds sustainability to renters
- Reduces risk on landlords
- Will be costly to administer and implement
Address Racial Discrimination in Housing
This campaign promise includes creating a national standard for housing appraisals to ensure communities of color aren’t assessed unfairly. It is a step in the right direction, though it won’t solve all the problems.
- Ensure fair housing appraisals.
- Bring more equity into all communities.
- Location is a major factor in real estate appraisal, this program could sway that.
Elimination of 1031 Exchanges
This act is certainly a significant event for real estate investors. The 1031 Exchange allows real estate investors to “swap” one property for another of like-kind while circumventing capital gains tax. Popular among real estate investors, this proposed action simply closes what some may view as a tax loophole.
- For real estate investors? None.
- Losing a popular real estate investment instrument
Much More to Come
Of course, these are only the ideas that we have heard thus far. Certainly, there will be many more changes in the next four years. However, preparing for what we know (or expect) to happen can help real estate investors make the best decisions for their long-term real estate goals.
If you would like to discuss the impact of some of these changes or how else Biden’s presidency could affect real estate, give us a call or an email. If you need a hard money loan, contact us at Park Place today.