President Donald Trump has been in office for a little less than a month now, but he’s already articulated some of his plans for the U.S. economy.
In the first post in this series, we took a look at the impact of some of his policies on rates and mortgage products. This time around, we thought we’d take a look at how some of the policy initiatives he’s talked about could impact one of the economy’s biggest industries: housing.
In order to do that, we went to someone who knows as much about the economy as anyone we know, Quicken Loans Chief Economist Bob Walters. Walters discussed the potential impact of some of the president’s campaign promises.
It’ll be a while before we see the effect of President Trump’s proposals on the economy, but he has given clues about what he wants to do in speeches, such as his inaugural address. We asked Walters about the impact of three pillars of his policy – infrastructure spending, taxes and tariffs on trade, and housing.
The president has been clear about his plans to stimulate the economy by spending heavily on our infrastructure, such as high-speed rail, airports and roads, among other things. Walters said that the places that receive infrastructure investments could definitely see an impact on their local economies, including housing.
“All those things lead to the ability for more commerce, for people to more easily trade with one another,” Walters said. “Undoubtedly, I think it would have some effect. Just like if you build the railroad, towns spring up along wherever the railroad depots are. I’m sure there would be some impact like that.”
Trump has also stated his desire to lower taxes. If he’s able to shepherd these proposals through Congress, what impact does that have on housing?
Unsurprisingly, having more money never hurts.
“If they have more money to spend, they have more money to buy housing and more money to build housing, so that should be a stimulant from that perspective,” Walters added.
Trade and Tariffs
Finally, the president has talked about his desire to bring back jobs by having more goods and services made in America. To accomplish this, he wants to renegotiate some of our trade partnerships to place tariffs and taxes on imports from other countries.
When analyzing how this type of policy impacts housing, Walters said you have to look at how this protectionist trade strategy would impact local economies before spreading to a national level.
“When the auto industry does well, Southeast Michigan does well,” he said. “When the auto industry does poorly, Southeast Michigan does poorly. That may not affect somebody in Oregon. Wherever there may be import tariffs or trade, there will undoubtedly be some regions that do better than others. To the extent that it’s either good or not good for the country, then there’ll be that much more national impact.”
Finally, Walters pointed out that we can talk about how individual pieces of this will affect the housing market but that the issue is much broader than that.
“I always say anything that affects the economy affects housing because housing is by far the biggest thing that people spend their money on,” he said. “It’s 20% to 25% of GDP. Anything that increases GDP and increases national wealth is going to help housing. Anything that decreases it is going to hurt housing.”
If you’re in the market to buy or refinance, the economy is pretty good right now and rates are still low. If you’re ready, you can get started online or call (888) 728-4702.
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