What Will Each of the Candidates Do For the Real Estate Market If They Are Elected President?

The 2024 presidential election is coming up in four months and on July 21, 2024, President Joe Biden formally announced that he was withdrawing from the presidential race. This left the Democratic party with a decision which was ultimately made July 30^th, when they name Vice President Kamala Harris as their endorsed candidate for president. With both candidates for president unequivocally named, let’s look at what both Donald Trump and Kamala Harris might do to or for the real estate market if elected as president.

The Context: Presidential Action in the Last 25 Years

First, a little background is necessary to provide context. Although commercial real estate will be mentioned in the article, most talk about the effect that a president has on the real estate market will center around their housing policies. This is because presidents are usually called upon to facilitate legislation and practices that directly affect the housing markets of the country. Moreover, housing policies have the potential to affect most if not all people living in the United States, because everyone needs a place to live and will likely have to engage with the housing market in some way, either through purchasing home, refinancing a mortgage, renting a house or apartment or even selling a residential property. Commercial real estate, on the other hand, is typically given a more hands-off approach by presidents and is usually managed under the president’s more general economic policies, if at all. The few times when the White House did have to focus directly on commercial real estate are notable, with the most recent instances being the establishment of the Resolution Trust Corporation in 1989 to sell banking assets that were many commercial real estate buildings and mortgages to mitigate the banking crisis of the late 80’s and the establishment of the Troubled Asset Relief Program in 2008, during the Great Recession.

Understanding the political ideologies of Republicans and Democrats, conventional wisdom would state that Republican presidents favor smaller government and pro-business solutions and would tend toward market incentives to affect the housing market. Following the same logic, Democratic presidents, favoring the use of government to facilitate social reforms and provide for societal necessities, would lean more toward the use of governmental programs to stimulate housing growth. Although, there is some truth to these inclinations, the actual record of presidential action on housing policy and real estate has been most influenced by both the fact that most presidents govern from a more pragmatic stance than the one on which they campaigned, once they enter the oval office and the historical context in which the presidents have found themselves. Of these two considerations, historical context seems to exert the most influence.

Presidents over the past 25 years have, for the most part, made housing and economic policy decisions that were aligned with their expected style of governance. That said, there are some presidential moves in these areas that of necessity, were surprisingly out of character for the president who made them. The Faircloth Amendment of 1999, an amendment that limited the construction of new federal housing units to “one-to-one” replacements of existing units, dealt a mighty blow to federal public housing. It, however, was passed under President Bill Clinton, a Democratic president. Although, not uncharacteristic for Clinton, who in his autobiography mentions that he ran on promises of fiscal responsibility and shrinking the government, this move does break with the more traditionally expansive view of federal housing taken by most Democrats and Democratic presidents. Conversely, George W. Bush, a Republican president presided over a time in which the government took a very active stance to incentivize home and farm ownership. Much of his housing reforms took the form of market incentives and loan programs, which is in keeping with his Republican affiliation. President Bush, however,  presided over the largest US government purchase of mortgages and real estate assets in history, when his administration formed TARP. In his biography, President Bush explains his trepidation around engaging in such a large amount of federal spending, but that ultimately the circumstances made some type of action necessary. President Barak Obama, as President Bush’s successor, spent much of his presidency managing the fallout of the Great Recession and the government’s purchases during TARP, creating numerous governmental programs that assisted homeowners who were affected by the mortgage crisis taking place during his term. This establishment of government programs that directly dealt with housing issues made the Obama administration feel like a more traditionally Democratic regime.

The Effect of a Trump Second Term

Trump, as a former president, has an established record of presidential policy on housing, which consists of limiting the government’s influence on housing practices and “targeting” the beneficiaries of governmental action. During his time, the Trump administration worked to repeal or weaken President Obama’s protections against housing and lending discrimination, calling them “ineffective.” The administration also worked to ensure that low income housing would not be built in suburbs, while incentivizing housing investment in low income areas. It also proposed a rule that gave federally-funded homeless shelters the ability to turn away individuals whose sex does not match their biological sex, a move that weakened the federal Fair Housing Laws. 

Putting aside the apparent issues of prejudice and bias that can be found in the methodology of some of these reforms, one aspect of the moves made by the Trump era housing reforms is that they are seemingly done in the spirit of limiting government power. The other side to President Trump's effect on the real estate market--his tariffs on Canadian lumber and steel and aluminum imported from other countries, however, seem to be in stark contrast to this ideology. Such extensive levying of tariffs was an expansive use of government power that directly affected the housing market by increasing the price of new construction. In light of both of these moves, President Trump’s housing policy seems less motivated by any particular guiding policy or set of beliefs, but instead by overt pragmatism and a desire to serve his political base.

Another hallmark of the Trump administration, was its push to privatize public housing. Notably, the Department of Housing and Urban Development (HUD) pushed privatization of its multifamily housing stock for years before President Trump entered office. In response to the apparent lack of HUD funding to maintain its public housing stock, HUD created the Rental Assistance Demonstration Program (RAD) in 2012, during the Obama Administration. Initially, the RAD program sought to establish public-private partnerships and ensure that the properties rehabbed were owned or controlled by a public or non-profit organization. During its previous term, the Trump administration sought to drasticlly increase the RAD privatization limits to privatize a much larger number of units, while simultaneously seeking to cut funding to the public housing associations that would partner with them. This course of action, if continued into a second Trump term, would either lead to more freedom for the private developers who take on RAD projects or would lead to RAD projects being so grossly underfunded that they do not make economic sense to undertake. Either way, the result will be a more diminished HUD presence in the RAD projects and a weaker HUD in general during President Trump's second term.

President Trump’s record on housing seems to be guided by the Republican sentiment that a smaller, less intrusive, government is a better one. Trump, however, does not seem to share his Republican predecessors’ trepidation toward using the government to directly influence the market, as doing so seems to produce less cognitive dissonance in him than it did in other Republican presidents. Furthermore, President Trump seems to have no issue with disparate impacts resulting from his housing policies. Under a second Trump term, one can expect to see a weaker HUD and more market incentives for housing. These market incentives, however, may be targeted to create specific outcomes that may benefit everyone, but create specifically benefits for his base.

The Effect of a Harris Presidency

The fact of matter is that no one knows for certain how a Kamala Harris Presidency will affect housing. Normally, most interested people would be familiar with the talking points of both candidates by the July or August before the general election. The issue with VP Harris, however, is that she has been in the presidential race for barely two weeks at this point. The country is just getting to know her as a presidential candidate and is just beginning to learn about and understand her policy agenda. There is far less information available on VP Harris’s presidential tendencies than there is for President Trump and what does exist does not necessarily give a clear picture of how she will operate as an executive.

Harris as AG and Senator

There have been articles written (most notably the ones written by CNBC and  National Mortgage News) about how VP Harris’s time as the Attorney General of California and as a Senator will influence her housing policy. VP Harris’s record on housing as an attorney general, however, should not be considered heavily, as her record in that position was not activist, but instead reactive. Her California Homeowner Bill of Rights, put forth during her time as Attorney General, reads like a standard operating model for dealing with mortgage lawsuits more than a progressive or even summative document putting forth a coherent agenda on housing. As an Attorney General, VP Harris would have certainly come into contact with housing issues as a matter of course, but her handling of these issues seemed to be more dictated by a desire to manage these issues than to advance any particular agenda.

VP Harris’s record as a senator provides a similar level of information as her record as the Attorney General of California, when it comes to housing matters and real estate in general. The one senatorial achievement that her campaign champions in the area of housing is her introduction of the Rent Relief Act of 2018. This bill was an attempt to provide a tax credit to renters paying more than 30% of their income in rent. The bill was introduced to the Senate, but never went further. VP Harris's reputation as a senator is unmistakably liberal, but more focused on matters of social justice than economic policy. Like her Attorney General record, Harris’s senatorial record can speak to her Democratic governing stance and pragmatic nature in general. Her position as a Senator, however, is not an executive position, like a that of a mayor, governor or even a private executive and so her senatorial record tells us very little about how VP Harris will actually govern as a president.

Is Harris Like Biden?

As Vice President, VP Harris did some notable work with HUD. One of her most well-known achievements arising from this collaboration was her presiding over the Pathways to Removing Obstacles to Housing (PRO Housing) grant, which is a new housing construction subsidy. VP Harris also announced an increase in HUD funding over $5 billion. In addition to these two accomplishments, as a candidate, VP Harris has proposed the LIFT Act, a rental assistance plan that differs from the flat 5% increase cap proposed by President Biden. The proposal of this legislation is an indication that VP Harris will not only put forth effective housing policy, but will also not be a carbon copy of her predecessor. 

President Biden’s housing policy has been characterized by some reestablishment of the HUD powers that were stripped during the Trump administration, but primarily has been plagued by the housing unaffordability that has accompanied an extended period of inflation. VP Harris will likely adopt some of the Biden policies that work for her, but will seek to distance herself from the negative aspects of Biden’s presidency by trying to mitigate them, as she is doing with the LIFT Act. Being a liberal she will likely seek to address the nation’s housing issues by offering direct incentives to the lower and middle class instead. All of this, however, is merely conjecture, as no one truly knows what the future will hold.

Commercial Real Estate for Trump and Harris

Neither Trump nor Harris has directly mentioned the commercial real estate market, however, this is to be expected. As stated above, presidents rarely engage directly with commercial real estate, unless it is absolutely necessary. To get a sense of how each of the candidates will affect the commercial real estate markets, one must look at their proposed economic policies. An extensive analysis of Trump’s record on economics and Harris’s proposed economic plan is far beyond the scope of this article. That said, both candidates will inherit an economic environment of recovery, characterized by high, but steadily declining inflation. Any president whose policies do not disrupt the economy’s recovery will be able to take credit for the improvement taking place during their term.

President Trump’s economic policies have been given the name Trumponomcis and can be characterized by an emphasis on tax cuts, deregulation and protectionist trade. The Trump tariffs and the elimination of the minimum income tax for corporations are some of the most notable economic policies from President Trump’s time in office. VP Harris, on the other hand, may adopt a moderate stance in her economic policy. In a recent article, CNN called her “more progressive than Biden.” That said, VP Harris has proposed raising the corporate tax rate to 35%. This proposal is higher than the 21% that existed during the Trump presidency and is even higher than the 28% proposed by Biden. As stated above, it seems likely that Harris will align herself with many of the Biden’s policies, but will do her best to capitalize on the economic recovery that is already taking place.

Ultimately it's a safe bet that neither Trump nor Harris will seek to do anything that disrupts the commercial real estate market and the market is projected to strengthen as interest rates stabilize and the market adjusts. Despite this intent, Trump’s tariffs could contribute to material shortages and increasing construction costs, as they have in the past. Trump’s team may have learned the lessons of their previous term and adjust their tariff policies accordingly, but in the absence of such changes, new construction will be more expensive under a Trump presidency. These increased construction costs under Trump, however, could be offset by the reduced corporate tax burdens that his presidency would create, provided that the tariffs do not create prohibitive shortages.

VP Harris will seemingly be less hands on with the country’s macro economy than her competitor and so commercial real estate will likely benefit from stable and eventually lowering interest rates. Her proposed rental assistance tax credits under the proposed LIFT Act may incentivize more multifamily construction, if the legislation is executed effectively. At her core, VP Harris seems more focused on consumer-level reforms than macroeconomic policies. Her other economic social reforms, like increasing teachers wages and lowering student debt will likely not affect the real estate market much.

Both presidential candidates will inherit a market far less challenging than the one over which President Trump presided and the one in which President Biden took office. Conventional wisdom will probably lead both candidates to facilitate growth and not impede economic recovery. Recognizing the context, however, it is important to note that there are some real ideological differences between President Trump and VP Harris that will guide their policies and ultimately lead to different outcomes, depending on who wins the presidency in November.