The Presidential Election: Does it, Will it, Can it..affect the housing market?
With the presidential election just around the corner, it's no surprise that housing affordability has taken center stage. Both major party candidates have addressed the issue on the campaign trail, and it's clear that young voters are prioritizing affordable housing above all else.
As a Realtor and advocate for affordable housing, there is one thing that I wake up every morning thinking about. No, it’s not how much I wish someone would make coffee for me…that’s my second thought. It’s, “How can I structure my day and negotiate my deals better today to get my buyers into a house this month?” Not because I get off on the thrill of the deal, it’s because my buyers these days are EXHAUSTED, tapped out, pushed to the edge of what is humanly reasonable, twisting themselves into financial contortions that would make any Cirq du Soleil acrobat jealous of their flexibility. I have moral rage surrounding the issue of affordability.
On top of the burden of home buying affordability and predatory mega builders today, the powers that be keep telling us that “The economy is fine stupid, it’s totally normal that you are working three jobs to buy this house!”…we are in an election year. Now y’all know elections DON’T EVER do anything to thread the needle of solving any housing crisis, but they do affect everything else on a deeply psychological level when it comes to how we do business and thrive (or not) in our daily lives. Folks generally take a ‘wait and see what happens’ approach the year leading up to an election to make big decisions. Affordability in the housing market, well that’s its own animal.
Source: CNBC.com
The Data Explanation: “Too Much, too many, no number! I’ll buy it tomorrow maybe.”
As we all know, decisions in residential real estate can be overwhelming, especially when it comes to navigating the complex world of market data and how real estate professionals like myself valuate houses. With the presidential election just around the corner, it's no surprise that housing affordability has taken center stage. Both major party candidates have addressed the issue on the campaign trail, and it's clear that young voters are prioritizing affordable housing above all else. As they should.
Source: CNBC.com
So, what's the deal with the housing shortage?
Based on “The Numbers” it's clear that a lack of supply has been the primary driver of high home prices and worsening affordability in the US. But here's the thing: the estimates of the housing shortfall vary wildly and there is significant lag time when collecting data on a national scale, ranging from 1.5 million to 5.5 million units. That's a big range. Housing markets can and do behave drastically different when looking at averages depending on where you live. The jury is out on how much we can rely on the humans who interpret that data to tell us what might happen next, but the takeaway is clear: we absolutely need more housing to meet demand nation wide.
Source: CNBC.com
Now, let's talk about the different approaches to calculating the housing shortfall. The National Association of Home Builders and Freddie Mac rely on assumptions about long-term housing vacancy rates, while Moody's Analytics takes into account pent-up household formations. Up for Growth, a national housing member network, nets out second and vacation homes, as well as uninhabitable units, leading to their higher estimate. And the National Association of Realtors takes a different approach by comparing current levels of housing construction with historic averages.
So, what does this mean for us in New Braunfels? It means that we need to focus on increasing the supply of housing to meet the demand. And that's exactly what the Harris-Waltz campaign is proposing: incentives to promote new housing construction, including tax incentives for building starter homes, recommendations for streamlining permitting processes, and initiatives to stop predatory investing (my personal favorite thing to lament over) in single-family homes. Their goal is to facilitate the production of 3 million housing units over four years.
One thing that I am noticing in our market is the shift in the square footage size in new home builds in Central Texas. Gone are the days of massive, 5,000-square-foot mansions and good luck trying to sell one! Instead, builders are now constructing homes with smaller square footage, often in the range of 2,000-3,000 square feet. And I think this is a game-changer for families who are looking for a unique solution to the affordability crisis. Why not consider buying one of these smaller homes and converting it into a "multi-generational legacy home"? With a little creativity and some smart design, you could easily add an in-law suite or a separate living space for your adult children. And with builders now purposefully designing homes with layouts that make it easy to add or subtract bathrooms, walls, and kitchens, the possibilities are endless.
As for the Trump-Vance campaign, they've suggested reducing government regulation and curbing immigration to expand the housing supply. While I understand the desire to reduce regulation, I'm not convinced that this approach will solve the problem. In fact, it might even exacerbate the issue by limiting the number of people who can contribute to the housing market.
Action Plan: Where to Start?
It's clear that we need a multifaceted approach to building and sustaining affordable housing that encourages new construction, motivates homeowners to sell their homes, and reduces regulation. We need to incentivize local and state governments to reduce the costs associated with homebuilding, and that won’t happen on its own y’all! Get involved in your communities and vote, it’s the ONLY way. It may seem like your votes don’t matter sometimes..but they DO!
Speaking of mega mansions that would be GREAT to convert into your familie’s "Multigenerational Legacy Home”. Seriously! Think about it:
As your REALltor and Advocate for affordable housing, I'm committed to staying on top of the latest developments and working with our local leaders to find solutions that work for our community. Let's work together to make New Braunfels a place where everyone can afford to call home y’all!
"There have been few things in my life which have had a more genial effect on my mind than the possession of a piece of land." —Harriet Martineau
"There have been few things in my life which have had a more genial effect on my mind than the possession of a piece of land." —Harriet Martineau
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