Biden Victory Impact on USA’s Housing

As results trickle in following a historic 2020 general election, results seem to be leaning toward a Joe Biden victory, but potentially also a Republican-led Senate. What would the impact of a Biden presidency be on housing? “For the mortgage industry, a split government might be the best possible outcome,” said Rick Sharga, senior vice president at RealtyTrac. “Because it would probably prevent overarching new tax policies that could impact investment and could impact the cost of homeownership.” Gridlock in Washington won’t stop Biden’s administration from attempting to push through sweeping changes into housing, where the former vice president has promised to invest $640 billion over the next 10 years so Americans can have “access to housing that is affordable, stable, safe and healthy, accessible, energy efficient and resilient,” according to his campaign website. He has pledged to introduce a tax credit for first-time homebuyers upwards of $15,000, reintroduce sharper regulatory teeth to agencies such as the Consumer Financial Protection Bureau, alter a spate of restrictive zoning laws to increase development, build millions of units of affordable housing, and cap payments for certain renters. It is also widely believed a Biden administration would keep the GSEs under conservatorship. Regardless of who’s in the White House, observers from across the housing and mortgage industries believe interest rates will continue to hover near historic lows for the next several years and volumes will remain high, largely due to simple economic realities: there simply isn’t enough inventory and the economy is too fragile for rates to increase. Some say it might even be business as usual, globally speaking. Such is the state of politics in a polarized nation with frequent election cycles.“At this moment, there will be very little change if Biden wins and the Senate remains,” said Patrick Stone, CEO and Chairman of Williston Financial. “People think Biden’s going to do this, going to do that. But he’s going to be handcuffed by the makeup of Congress.” The interest rates and the 10-year Treasury dropped recently primarily because the market doesn’t expect another massive CARES Act-like stimulus if Republicans still control the Senate, Stone said. It might be just a trillion or two dollars. Despite potential roadblocks put in the way from Republicans, Biden has wide latitude to use agencies and regulatory bodies to shape housing policy. Federal Housing Finance Agency director Mark Calabria and Treasury Secretary Steven Mnuchin have made it clear that they want Fannie Mae and Freddie Mac out of conservatorship. “And they are working very diligently to get to that outcome,” said Tim Rood, head of government & industry relations for SitusAMC. “So I would imagine that if they continue on this path, they’ll have a capital framework released this year.” He added that the Trump administration would likely do what they could do make the GSEs “as durable as possible” before a new administration is seated. Should Biden take office, he would likely wind back any progress Mnuchin and Calabria made in taking the GSEs out of conservatorship.  “If Biden wins, he is going to look to use Fannie and Freddie as instruments of public policy to help close the homeownership gap, the wealth gap, cap people’s payments on both rental and occupied housing, support the construction of 1.5 million to 2 million affordable housing units,” said Rood. “So I would imagine that the GSEs are going to have a much longer road to hoe getting out of conservatorship with a Biden administration.” “Biden would tend to take the approach to apply regulation in favor of consumers, balanced with interests of business, including on environment, workplace and consumer regulation,” said Mark Hamrick, a senior economic advisor at BankRate. “One could see a Biden presidency more aggressively, and potentially more effectively, finding room for compromise. As was seen on the question of stimulus here in the second half of the year, the Trump White House was unable to forge a middle ground between the Senate and House, leaving individuals and businesses going without.”