What the Presidential Election means for the Real Estate Market

As many of you have been on the edge of your seats waiting for the presidential elections to take place, they are finally here! Now you may be wondering what this could mean for the Florida Keys Real Estate market. Elections can bring uncertainty, policy expectations, and consumer confidence. The presidential election often impacts the real estate market through changes in economic policy, tax laws, and market sentiment, which can be particularly noticeable in a high-demand state like Florida.

Here’s how the election outcome might influence the Florida Real Estate market:

1. Interest Rates and Mortgage Market

• Policy: While the election itself doesn’t directly change mortgage rates, the economic policies of the new administration could influence the Federal Reserve’s decisions. If there’s a focus on managing inflation or stimulating the economy, rates could either stay stable or shift, affecting monthly payments and buying power. In the Florida Keys, where property values are higher than in many other parts of the country, even small changes in mortgage rates can make a significant difference for buyers.

• Impact on Buyers: Rising interest rates may slow down buyer activity, while lower rates typically boost home-buying interest. In Florida, this could affect demand from out-of-state buyers, particularly those relocating from higher-cost areas.

2. Tax Policy and Deductions

• Capital Gains and Property Taxes: New federal tax policies could influence real estate investment and homeownership incentives. For example, if tax benefits for homeowners are expanded, this might encourage more people to buy or invest in second homes—a common trend in the Keys. Tax policies could also affect capital gains for sellers, which would be especially important for those who have held onto properties for a long time. Florida, with no state income tax, remains a popular destination for those seeking favorable tax conditions.

• Second-Home Ownership: Since the Florida Keys are popular for second homes, any tax policy adjustments on investment or vacation properties could impact demand in regions like the Keys.

3. Environmental and Coastal Regulations / Flood Insurance: Living in the Keys, we know how important flood insurance and coastal protections are for our homes. New policies around environmental protection, flood insurance, and disaster relief could be pivotal. Given Florida’s vulnerability to hurricanes and rising sea levels, these regulations are particularly important for both homeowners and investors.

4. Investment Sentiment and Market Confidence

• Market Stability: Real estate investors tend to watch for policies that might stabilize or destabilize the market, which in turn affects housing demand, especially in high-value areas like South Florida. Any tax incentives or infrastructure plans could either boost or temper investment.

5. Out-of-State and Foreign Demand

• Relocation Trends: Florida’s attractive tax and weather conditions make it a destination for those moving from higher-tax states or other countries. Changes to immigration policy, for example, could impact foreign investment in Florida properties.

6. Local Employment and Infrastructure Initiatives

• Development and Jobs: Federal spending on infrastructure or jobs programs can impact local employment, which in turn affects the housing market. In Florida, expanded infrastructure like roadways, transportation, or coastal protections may attract further investment and create opportunities for housing development.

While it’s difficult to predict exact outcomes, the trends following an election look very promising.  Donald Trump, the now 47^th President of the United States has talked on various policies he plans to enact. While details are limited thus far, here are some of the favorable impacts he has suggested he may make.

What are some policies that may change if Donald Trump wins the elections in 2024?

Trump has suggested an emphasis on private-sector-driven growth, particularly through targeted tax incentives to stimulate the housing sector. This could reduce construction costs, which may ease housing shortages and support home price stability in high-demand areas like Florida.

Trump’s approach includes potential tax incentives that would encourage homeownership and investment, particularly if focused on mortgage interest and insurance deductions for buyers. However, specifics on the exact structure of these incentives are not fully detailed yet. Lower regulatory barriers and continued low tax rates could further attract investors to the Florida real estate market, enhancing economic growth and possibly sprouting new developments.

This policy direction aligns with the trend during Trump’s previous term, where lower taxes and deregulation coincided with housing market expansion. However, external factors, such as Federal Reserve policies on interest rates, remain significant influences on mortgage rates and affordability, which can indirectly affect the success of these policies.

What does this mean for your Real Estate Goals?

Whether you are a buyer or a seller the outcome of the election is likely to have some impact on your real estate strategy. The Florida Keys market is unique, but understanding national factors is crucial and can assist in making informed decisions.  As your real estate expert, I am here to answer any questions you may have and help you create a real estate plan to navigate our market together.