What are the changes and challenges they represent for the housing market?\

Housing is taking a more central focus with candidates on the presidential campaign trail. A recent nationwide public-opinion poll commissioned by the National Low Income Housing Coalition found that as many as 85% of American citizens are in favor of affordable and safe housing for all, highlighting the importance of this issue in the public eye.

Joe Biden remains as the Democratic party candidate, with President Trump running for reelection on the Republican party ticket. As of press time, these are their stated positions on housing.

As these candidates further clarify their housing plans it has become clear that there will be a giant impact on the real estate market, depending on which candidate is elected.

But questions remain about how their stances will really affect the housing market and, by extension, private lenders.

Joe Biden
Former vice president Joe Biden has also thrown his hat into the housing ring. His plan is to rebuild the middle class with a specific focus on previously marginalized communities.

Biden’s housing plan will create a $640 billion injection over a period of 10 years in order to end discriminatory housing practices, provide housing assistance (e.g., offering help with down payments) and increasing the supply of homes while lowering the overall costs for individuals.

Biden has also specified that his housing plan will include provisions for the formerly incarcerated, who commonly find it difficult to find a place to live after serving time. Under a government led by Biden’s guidance, the Department of Housing and Urban Development would award housing contracts to landlords who are open to renting to prior inmates at reasonable rates while they transition back into living in everyday communities.

Beyond this, Biden has announced his intention to launch a new Homeowner and Renter Bill of Rights that will place more stringent requirements on mortgage brokers, landlords and other real estate professionals to ensure the protection of buyers and renters during loan transactions and other processes.

On his campaign website, Biden has additionally stated that he will introduce incentives for homeowners who construct or retrofit buildings to be more eco-friendly, a recent trend that has become a highlight of the sector’s attention. Sources have similarly indicated that Biden has in the past expressed interest in updating infrastructure and general amenities in urban areas to ease other aspects of living in cities, such as dealing with traffic congestion.

Donald Trump
Current President Donald Trump has yet to announce his formal housing plans as the election race heats up.

Previously, however, in 2019, he announced his intention to reform the housing finance system by improving the regulatory oversight of Fannie Mae and Freddie Mac, promoting competition in the housing finance market and protecting taxpayers from further bailouts that will be detrimental.

Throughout his current term, Trump has introduced sweeping reforms to taxes, previous regulations, Qualified Mortgage rules and how much credit the average American is entitled to. Reactions to these changes have been mixed as the middle-class buyer has been affected by the capping of federal deductions for real estate taxes, while lenders have responded well to the changes in regulation and insurance against loan defaults.

What This Means for Lending
Both candidates seem aware of the issues of affordable housing and are planning to address it if elected. The problem with promises made on the campaign trail is that they are typically easier to execute on paper than in reality. Once elected, many candidates have found it difficult to uphold their campaign promises when faced with the list of tasks, pressures and duties a newly elected president faces.

That’s why the housing market typically slows down during election years—investors wait to see what the changing circumstances will bring come Election Day and how those changes will affect their investments. As for the lending industry, both private and institutional lenders will see a decrease in loan applications when compared to non-election years as real estate investors become more cautious of election outcomes.

Over the short term, investors consider it better to wait until after the elections before applying for a private loan since the candidate-elect will have a significant effect on the general economy. Historically, housing prices, as well as the number of buyers and sellers actively moving in the market, recuperate after the time of uncertainty and speculation has ended. It’s not only real estate that is affected, however. Election years typically also see decreases in performance of other asset classes such as the stock market.

In the long term, depending on which candidate is elected, affordable housing can offer exciting investment opportunities that will draw these investors back to the sector. The construction of more affordable housing units will bring more inventory into the market, which could bring additional tax incentives to investors providing housing options that are available to underserved communities. New developments in the forms of micro living could also offer unique chances to invest in real estate.

Both candidates will also have a unique impact on the private lending space upon their election.

Under Biden’s lead, individuals working with private lenders for real estate will see benefits such as down payment assistance through a refundable tax credit.

It’s difficult to be sure what kind of impact Trump will have on the private lending space without any official housing plans.

In the build up to the election, candidates are focusing on providing housing to underserved communities and are steadily addressing the need for economic development opportunities. Whoever is elected this year will have big shoes to fill in terms of providing the affordable and safe housing that Americans keenly favor.