How Will Home Prices be Affected by a Biden Presidency?
As we consider how our nation may change under the new administration in 2021, you might be wondering how things are going to affect your ability to buy a home. The housing market is quite easily affected as changes occur in the political and economic landscape of our country, so this is a valid concern.
As a whole, it is likely that house prices will rise during Biden’s presidency. Here’s why.
Biden’s Proposed First Time Home Buyers Grant
Biden has stated his intent to create a new tax credit for first-time homeowners of around $15,000. According to Lawrence Yun, the Chief Economist of the National Association of Realtors, this “can go a long way in terms of helping first-time homebuyers and minority households.” By making home ownership more attainable for more young adults and new families, demand will go up. Anytime demand increases – prices follow.
Low Interest Rates
The federal interest rates are currently at a major low point – and many anticipate this to continue. Many buyers will want to take advantage of this, causing home demand to increase even further.
Biden ran his campaign promising a new infrastructure bill that will create thousands of jobs in the clean energy sector. Assuming that this bill passes, we’re likely to see a surge of new jobs – meaning more income for more families and giving more people the stability to buy a home.
It is looking more and more likely that we will see $2,000 stimulus checks in the near future. This will put more money in people’s pockets, boost the U.S. economy, and therefore keep the housing market moving upward. This stimulus could be used toward down payment savings, further lifting demand and prices. We may also see improvements on state and local taxes, which would majorly benefit homeowners in highly taxed areas (CA, NJ, NY). This could produce fewer sales, leaving a high demand to supply ratio and therefore higher prices.
On top of that, Biden may be reducing student loan debt, putting young Americans in a more stable position. According to Stessa, “this coupled with down payment incentives can significantly increase the buyer pool, driving up demand, and prices.”
Of course, there is no way to be certain about which direction home prices will go. The housing market is delicate and can be easily disturbed by things that can’t be controlled, such as…
Too much housing: As developers get excited about demand, it is always a risk that they over-compensate and develop too much housing. This can cause prices to plummet downwards, as buyers have more choice and developers have to price more competitively. This is unlikely to develop as an issue in the near future – since experts actually claim that we are currently in a housing shortage.
Natural disasters: Increasing rates of fires, floods, hurricanes, and earthquakes can quite easily crash the demand for housing in affected locations.
Stock market crash: Especially after such a roller coaster of a year, the stock market hangs in a delicate balance. Most of the growth is coming from a small handful of stocks – should these crash, demand for housing will crash along with it, and we will see massive foreclosures.
All in all, the odds are that we will see a rise in house prices as the housing market booms along with the economy when Biden takes office. Although there are always risks that could negatively affect the market, it is likely that if Biden is able to achieve the bills and measures he has promoted during his campaign, the demand for new homes and price of housing will increase.