After the Election: Changing Trends in Housing?

The recent Presidential election may have changed the political landscape in major ways, even though housing wasn’t a particularly hot topic during the campaign. Still, real estate industry-watchers see some factors emerging in Barack Obama’s second term that may have an impact on home purchases, primarily financing and the rental market.

Although news of the election results sent many rushing to protect their assets from a variety of perceived threats, the relative silence of both parties on the recent mortgage meltdown and the future of the housing industry suggests that major changes may not be looming on the horizon. In fact, some programs and policies in place to help struggling homeowners and stabilize the housing market are likely to continue, affecting investors and homeowners alike.

As part of efforts to keep homes out of foreclosure, some real estate trend-watchers predict more opportunities for refinancing as well as relief for owners sinking “underwater” with mortgage debt. The government-sponsored HARP (Homeowner’s Affordable Refinance Program) was recently upgraded to include a broader range of eligible homeowners who

can apply to refinance even if they are in trouble with mortgage debt.

The provisions of the HARP Act are expected to help homeowners keep their houses, rather than going into foreclosure or being forced to a short sale – both maneuvers which would put more homes on the market. Like other mortgage relief provisions instituted

by some major lenders, this program has the long-term effect of

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reducing the number of houses available to investors through individual sales.

The Dodd-Frank Act, which was partially implemented in Obama’s first term to impose some regulation on the financial industry, is likely to be fully in place for 2012 and beyond. The provisions of the Act include tougher lending standards in reaction to the lax, unregulated days before the mortgage crash of 2008-2011. Keeping these standards in place and implementing new ones mean that qualifying for mortgages becomes more difficult and reduces the risk of defaults.

Another aspect of the housing industry affected by a second term in office for Obama is the mortgage interest deduction, which allows home owners, either residents or investors, to deduct annual mortgage interest on their income taxes. The President has long planned to limit this deduction for those in the higher income brackets, while keeping it uncapped for middle and lower class home owners.

For individual investors applying Jason Hartman’s strategies for successful income property investing, the new housing landscape looks much like the old one, with mortgages and properties still available across the rich and varied landscape of the US housing market. (Top image: Flickr | aeneastudio)

The American Monetary Association Team

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