Trump will be great for real estate prices

[gzz]

Our new president is a real estate developer and a massively levered investor. My gut says another bubble may be coming. It will be good for his popularity, his portfolio, and that of his favorite son in law who is heir to an even bigger real estate empire.

The fundamentals of tight inventory and low rates are already primed for a price spike. By itself those factors might be enough for another bubble.

But you add in Trump loosening up lending standards which are still pretty tight plus the general Zeitgeist of having a real estate mogul as the most important and famous man in the world, and the sky is the limit.

[spdrun]

Compared to Mel “3%” Watt, any Trump FHFA would likely support tighter lending standards. Rates are going up, and Trump has made noises about Fed-induced bubbles.

Also:
“I’m excited if the real estate bubble is about to burst because I’ve always made more money in bad markets than in good markets.” — DJT 2007

[millennial]

From what I’ve heard, rates will be going up soon which will have a negative impact on lending and also housing values. If I were you, it might be a time to pull out of RE and concentrate on other areas which will improve with rising rates like banks.

[spdrun]

Or have enough cash on hand to buy more properties when the next opportunity comes…

[Coronita]

Why would you want to sell if you cash flow well? I mean, you would get hit so hard with depreciation recapture, capital gains, etc.

[flyer]

Exactly, flu. Who knows what the future will bring, but we’ve continued to hold our properties over many economic cycles, and administrations, as most everyone we know has, and have still been able to take advantage of the other financial trends of the moment.

“Always buy, never sell” seems to have proven to be a good plan for many when it comes to real estate–especially in CA.

[gzz]

Why on earth would Trump let rates rise? Just put in soft money people at the fed, help manufacturing, have the fed buy all the paper Fannie and Freddie put out if the Europeans with their negative interest rates don’t want it.

This could lead to inflation and a weak dollar maybe, but that just cuts the real value of Trump Org’s big pile of fixed rate debt.

Here the personal and political interest of Trump and soft money Democrats plus industrial unions all align.

[spdrun]

You’re assuming that Trump actually cares about property prices outside his specific area of investment. His view is likely that housing prices will rise as jobs come in and people can afford to pay more, not that we should be giving 1%-down, low-interest loans to “stabilize communities.”

[(former)FormerSanDiegan]

I wouldn’t assume all real estate will benefit.

My “local” favorite REIT is off about 5% since the election.

Realty Income
Symbol: O

Was pretty frothy and benefitted from low interest rates. With interest rates increasing or normalizing some of the froth has to come out. Higher growth and higher interest rates might spell the end of the long bull run for commercial REIT investors and yield chasers… for now.

[Rich Toscano]

[quote=flyer]”Always buy, never sell” seems to have proven to be a good plan for many when it comes to real estate–especially in CA.[/quote]

I don’t know… the average buyer at the peak 11 years ago is still underwater, and in real terms they’ve taken a beating. Valuation matters…

[flyer]

Good point, Rich. Should have qualified my comment.

That mantra seems to have worked out well for those of us who purchased and held primary and investment properties for the past 20+ years, as well as those we purchased during the Great Recession, especially with the great rental market, but it’s definitely a different story wrt the time period you mentioned.

[no_such_reality]

Valuations matter for the buy, and 2006 was basically tulip mania, even those however are close to nominal level.

If you could make the purchase pencil without appreciation, you’re golden.

California has been on a 200+ year grow out though. The last 50 years being relatively robust.

Contrast that with say, Detroit proper.

[Anonymous]

[quote=no_such_reality]
California has been on a 200+ year grow out though. The last 50 years being relatively robust.

Contrast that with say, Detroit proper.[/quote]

The home in Pittsburgh that my grandparents lived their entire life is worth about $43K. This was once one of the nicer areas on one of the most prosperous cities in the country.

My car cost more than that, and I’m not a car guy.

The one sure way to do well in real estate is to be born in urban California in the 1930s. And be white.

Moving forward it will probably still be good, but not a sure thing.

[outtamojo]

[quote=FormerSanDiegan]I wouldn’t assume all real estate will benefit.

My “local” favorite REIT is off about 5% since the election.

Realty Income
Symbol: O

Was pretty frothy and benefitted from low interest rates. With interest rates increasing or normalizing some of the froth has to come out. Higher growth and higher interest rates might spell the end of the long bull run for commercial REIT investors and yield chasers… for now.[/quote]

Will we see a further rise in rates due to a serial debt repudiater moving in to the oval office?

[spdrun]

The one sure way to do well in real estate is to be born in urban California in the 1930s. And be white.

Hey, hey, now, I know a black (West Indian) lady whose grandfather was back and forth between this country and his own in the 1950s and 1960s. He bought a few houses in Brooklyn for thousands, now they’re worth millions.

[Author]

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