President Donald Trump hasn’t been in office long, but his policies are already
shaping the home building and real estate markets in Washington, D.C and the surrounding areas. Let’s take a look at 4 ways the Trump administration is influencing D.C. real estate trends.
1. Washington, D.C. Area Home Builders Anticipate Increased Borrowing Power if Trump Can Successfully Reform the Dodd-Frank Act
President Donald Trump recently penned an executive order with the intention of updating and trimming down restrictive financial and banking regulations. Insiders have deduced that the main target of this order is the Dodd-Frank Act.
Former US President Barack Obama signed the Dodd-Frank Act in the year 2010 as a follow-up reform after the great financial crisis of 2008. The Trump Administration is now working to review and possibly revise the act. Trump has commented publicly about wanting to cut the Dodd-Frank Act extensively because he believes it is prohibiting American business owners from being able to borrow the money they need to conduct their businesses effectively. This is a particularly problematic issue in the home building industry.
2. Aspiring Washington, D.C. Area Homeowners May Be Less Restricted in Qualifying for Home Mortgages
The Dodd-Frank Act also has significant effects on the home mortgage market. Related reforms could potentially have dramatic effects on who can or can’t qualify for a home mortgage in the future. Right now, lending restrictions are so tight that many people living inside the Beltway don’t qualify for mortgages.
Another problem D.C. area homeowners are facing: Their homes frequently appraise for less than the amount of the mortgages owed on the homes, making it challenging to sell. In response, creative new businesses that sidestep the mortgage process have been popping up all over the place. One noteworthy example is sellyourhousedc.com, a Washington, D.C. area home buying service that pays cash for houses in and around the Beltway. Homeowners who find themselves in this situation can get out from under their homes by utilizing services like these.
3. D.C. Area Home Builders Anticipate Falling Prices for Newly Built Homes if Decreased Regulation Becomes a Reality Under the Trump Administration
Did you know that government regulation adds about twenty-five percent onto the cost you’d otherwise have to pay for a new home? Naturally, Washington, D.C. area home builders are enthusiastic about the Trump administration’s promises to curb regulation. They’re hopeful that such action will result in reduced upfront costs and labor for them and a trickle down effect leading to cheaper housing overall.
During his presidential campaign, Donald Trump promised American home builders that he would reduce regulatory burdens on them. One critical example is a rule referred to as “WOTUS”, which stands for “waters of the United States”. Home builders are concerned with this rule because complying with it adds to their costs and regulatory burdens and drives up the cost of new homes as a result.
From their point of view, the WOTUS rule gives the federal government undeserved authority over bodies of water such as small streams and even mud puddles on privately owned land. They contend that compliance with the WOTUS places unfair burdens on building developers and homeowners by requiring them to obtain federal permits for things that shouldn’t require oversight, like ditch digging or building fish ponds on their own properties.
President Trump recently affixed his signature to a new executive order guiding federal organizations including the Environmental Protection Agency to update or rescind the WOTUS rule.
These are 3 of the initial ways that the Trump administration is influencing real estate trends in the Washington, D.C. area — and in the rest of the USA as well. It will be interesting to see how the housing markets respond as these changes and others unfold in the future.