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Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
Here we go again.
In order to prove how consistently they can be wrong, our old friends at Zillow decided to convene a panel of – ahem – “experts,” to evaluate the economic policies of the three candidates left in the race.
They said according their survey, real estate experts and economists who study the housing market may be quietly rooting for Hillary Clinton in this year’s presidential election.
The site’s panel of 107 real estate analysts, economists and academics predict that home prices across the United States will grow between 3% and 4% over the next few years, but that those gains could be quickly upended if either Donald Trump or Bernie Sanders were to become president.
Note that their panel included “analysts, economists and academics.” And probably not a single person who has $1 in real estate aside from their personal residence. Clearly a perfect group to have an opinion on this.
Liking Clinton
Zillow’s panel felt that Clinton, the likely Democratic nominee, is more likely to pursue polices that positively impact home prices and housing finance reform.
Of the people surveyed, a 33% plurality said a Clinton administration would have a positive effect on home prices, while 31% said she would improve housing finance policies. In February, Clinton’s campaign published a housing agenda that calls for a $25 billion “housing investment program” and grants of up to $10,000 for low-income families trying to make down payments.
See where they’re going? They like Clinton because she promises to dump billions into the real estate market, particularly in low-income housing.
Um, I guess that makes sense. I mean, it turned out so well last time, didn’t it?
Boo for Bernie
The outlook under Sanders is very dismal, with 59% of panelists who expressed an opinion saying the self-described “democratic socialist” from Vermont would have a negative effect on home prices, and 65% saying he would hurt efforts to reform housing finance.
Like Clinton, Sanders has also laid out housing policies that promote home ownership, but his focuses more on replenishing the federal National Affordable Housing Trust Fund and lowering the credit score needed to secure prime-rate mortgages.
So they hate Bernie because he’s not promising handouts. Shocking, I know. It’s even more shocking because it’s probably the only handout that he HASN’T promised.
Both Clinton and Sanders also want to create more affordably-priced rental units. Despite the relatively close policy prescriptions offered by the two Democratic candidates, Zillow’s panel knocks Sanders because of his “far-left taxation plans.” Sanders has proposed tax policies that would see income taxes go up on nearly all levels of income.
Trump Card
Sanders might have scored the lowest, but Zillow’s panel expressed concern that Trump might become the 45th president, with 45% saying that the developer and brand manager would hurt housing prices; 48% saying that he would wreck chances of housing finance reform, and 59% saying he’d hurt the overall economy.
Other than claiming to make the “best deals,” Trump hasn’t said anything specific about housing policy since launching his campaign, but the people Zillow surveyed had their reasons…
When asked why Trump would impact their expectations so negatively, panelists largely pointed to his inconsistency on policy, unpredictability as a candidate and lack of political experience.
They might have also been turned off by Trump’s statements in 2006 and 2007, when he said “I sort of hope” the real estate market would tank.
Right. Criticize the guy for looking for an opportunity to buy low.
Zillow conducted its survey in late April, when the Republican field still featured Senator Ted Cruz of Texas and Ohio Governor John Kasich. Cruz fared poorly, too, though Kasich — who finished fourth in the delegate count after the field winnowed down to three candidates — was the only one to do better than Clinton.
The bottom line is that these “experts” concluded that a guy who has spent his entire adult life in real estate would be bad for real estate.
Only Zillow could come up with a conclusion like that.
Weigh In
I’d love to hear your thoughts about how you think politics and the election are - or will - affect real estate. Share below.
Dennis Fassett
earned a BS in Economics and followed that up with an MBA in finance. After working and corporate finance and banking for several years, he started buying single family houses, and quickly built a very nice portfolio of cash flowing rentals. When the credit markets started to dry up and he couldn’t get any additional single family mortgages he shifted his focus to apartment buildings. He now has over $3 million in rental real estate. He manages most of it his self and still has a day job. Dennis has even created his own Private Equity fund to buy apartment buildings.