Posted on November 21, 2020 in Market Analysis

A voter dropping a ballot into a box with the US flag in the background

The 2020 US Election results are finally in, and Joe Biden has won. As a democrat, Biden’s policies differ significantly from Donald Trump. The main question here is, how do these policies influence US real estate? According to experts in the real estate market, a Republican win would have mostly allowed the real estate market to maintain its status quo. However, with Biden heralding the presidency, we can expect a series of changes that affect residential and commercial real estate. Let’s review the election impact on real estate and what it could mean for buyers, sellers, and investors.

Real Estate Prices to Remain Stable

Regardless of the election outcome, we are unlikely to see any dramatic changes in real estate prices. If you review history, the housing market usually does not witness any significant shifts in price levels. It performs consistently under both democrat and republican governments. Since 1979, the NCREIF property index has delivered over 8.5% in annual returns under both government types.

That said, we may see reduced buying activity in Indianapolis. A common election impact on real estate is that buyers hold off on investing in a new property until the results come in. This is mostly to prepare for any changes in the market following the election.

Housing Could Become More Affordable

Biden plans to introduce an Affordable Housing Fund valued at $100 billion. He also plans to dedicate $5 billion toward building large community developments that offer affordable housing. This can make homeownership more accessible.

Besides this, Biden plans to support first-time homebuyers by offering up to $15,000 in tax credit and providing down payment assistance. This can decrease the financial burden on prospective homeowners and increase access to property ownership. Biden also plans to offer mortgage forgiveness for homeowners that have suffered due to the Coronavirus pandemic.

Rental Property Investors Could Suffer

The Affordable Housing Fund and other potential policies to make homeownership more accessible can benefit home buyers. Aspiring real estate investors can take advantage of it, as well. However, the same cannot be said for long-term investors that rely on rent payments as a source of income.

Rent collection allows property developers and real estate investors to pay utility bills, maintain the property, generate salaries, and pay real estate taxes. An increase in homeownership is likely to reduce renting, which could affect this investor segment.

The 1031 Exchange and Stepped-up Basis Loophole Could Get Removed

Biden has also indicated that he plans to remove the 1031 exchange and the stepped-up basis loophole. The 1031 exchange loophole allows real estate investors to swap one commercial property for another and defer any capital gains taxes. In the case of the stepped-up basis, it removes or reduces the tax burden associated with a real estate property when it is transferred to an heir.

If these changes are introduced, it could hurt commercial real estate investors and high-income individuals.

Get In Touch With Barbie King

As far as the election impact on real estate is concerned, Joe Biden’s win has positive as well as negative implications for buyers and sellers. If you are interested in learning more about how the election results will affect Indianapolis real estate or whether you should buy a home right now, get in touch with me. I am a real estate agent in the Greater Indianapolis area and can help you understand current market trends to make the right decision.

To get in touch, call 317-379-1758. You can also email me at [javascript protected email address]

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