How Will Midterm Election Results Impact the Real Estate Market?
Although the midterm elections took place on Nov. 8, it’s still unclear who will control Congress. Republicans appear to hold the edge in the U.S. House, The New York Times reported. The Senate remains up for grabs and might not be decided until next month, when the runoff between Georgia Sen. Raphael Warnock and challenger Herschel Walker takes place.
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The election results so far have been much closer than many expected, even if the GOP ends up controlling one or both houses of Congress. If that happens, the U.S. real estate market could be impacted in a few different ways, according to a new report from Cowen.
Cowen analyst Jaret Seiberg wrote that a Republican-led House likely means the end of the first-time buyer tax credit, MarketWatch reported. The credit was intended to give first-time home buyers up to $15,000 in refundable federal tax credits. Democrats tried to pass it last year through a reconciliation bill, but a new reconciliation bill is unlikely in a GOP-led House.
Another provision in the reconciliation bill, rehab housing, will probably also fail under a Republican Congress, Seiberg said. Under the rehab housing package, billions of dollars would have been put toward building, renovating or buying affordable public housing.
“It is hard to see how this gets past a GOP House,” Seiberg noted.
Affordable Housing Measures Passed in Some Cities
There is good news for supporters of affordable housing, however. At the municipal level, voters in some cities approved more spending for affordable housing, NPR reported.
Kansas City voters approved $175 million in bonds for “deeply affordable” housing with rents as low as $550 to $750 a month. Voters in Austin, Texas, approved the city’s largest-ever housing bond measure, while in Florida’s Palm Beach County, unofficial results showed voters approving $200 million in additional property taxes to encourage developers to build moderately priced homes.
Back at the federal level, Republican lawmakers are likely to keep Fannie Mae and Freddie Mac under government conservatorship, Seiberg noted. The Trump administration had wanted to take Fannie and Freddie out of government conservatorship, but that probably won’t happen even under a Republican Congress.
Finally, regardless of who controls Congress, you can expect lower premiums for Federal Housing Administration (FHA) loans.
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“President Biden already has his FHA commissioner and [Housing and Urban Development] secretary in place. It is why even a GOP sweep should not prevent Team Biden from cutting FHA premiums,” Seiberg wrote. “We still expect a 25-basis point cut to the upfront fee and a 25 basis-point cut to the annual fee.”
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