Trump’s Presidency Impact on Real Estate
Not here to talk politics. Just want to start a thread about the pros and cons of his presidency on our industry which are sure to be felt over the next few years.
What do you think the effects will be? Was speaking with an executive at National Equity Fund during the summer and with the tax cuts that will come, there will be less of a demand for affordable housing tax credits in the future.
How do you think it will impact the real estate industry?
I mean, the impact can only be positive in the short term. Mr Trump has and almost certainly will view his Presidency as an opportunity to enrich himself, that was more or less the story of his first term, so I would expect lots more handouts to the real estate industry in general.
If he manages to pass further corporate tax cuts (which is no certain thing with the House up in the air and likely to be extremely close either way) then that might hurt LIHTC prices. We also might see some actual helpful reforms come unstuck, since the House GOP will be less interested in obstruction for it's own sake (and Democrats generally care about good policy).
Ah yes because the corporate tax rate is directly tied to banks CRA needs. Correct as usual Ozy.
LIHTCs get priced based on the degree to which banks can take advantage of the credit. Lower corporate tax rates means lower tax credit pricing.
As usual, you are confidently incorrect. I'm always amazed people like you exist, full of confidence but totally empty of experience, knowledge, or even the slightest shred of humility.
Believe Trump will try to bring back accelerated depreciation to full 100% from the current 60% step down. Decent chance he also tries extend QOZF - that did so much to foster investment in impoverished areas through development.
Did it? I was under the impression the OZ program was pretty much a total flop at bringing development to areas that needed it. Deal volume was low and was almost entirely concentrated in wealthier neighborhoods (the ones that all the Trump advisors snuck in so they could juice the value of their land there). Would be interested to see data confirming or refuting that, though
I'm not in LIHTC, but anecdotally OZ's have had a positive impact in the underserved neighborhood in my market. You are correct that a lot of the investments are concentrated in a few of the best OZ-eligible neighborhoods, but it's definitely been a huge success as those neighborhoods were in desperate need of investment. It's not a perfect system but as the saying goes "do not let perfection be the enemy of progress."
With the (likely) republican sweep of White House, senate and congress, there will be no check on deficit spending and borrowing. As a result, the ten year yield is ripping. Borrowing by the United States government is going to crowd out (and make more expensive) real estate borrowing. I'm personally aligned with DJT's politics, but a check in the form of a democratic house would have been good (both for the country and our industry IMO).
Im very active in the HTC space, and it was under his administration that it went from a 1 yr to 5yr credit (absolutely horrendous change). So I def wouldn't take the view of "trump is a dev so he's just gonna do everything that's best for CRE" since that is not what happened last term. I think the answer depends on specific areas of the law that impact our business and seeing how those areas were affected in the last term to seek answers. Another that comes to mind in favor that hopefully comes back is the accelerated depreciation.
He will do what is best for him. Just like 2017-21. The idea that Mr Trump has some sort of principles or views beyond his own self interest and self aggrandizement is pretty demonstrably false; I think the last time Mr Trump did anything that wasn't intimately bound up with his own interests was when he took out an advertisement calling for the (wrongful) imprisonment of the Central Park Five.
He will promote policy which helps him and his family get rich, just like in his first term. If he isn't connected to HTCs then of course he won't care about them - the idea that he cares about "real estate" is only true insofar as he owns real estate.
I have no interest in getting into politics, just want to point out that your assertion would be extremely at odds with his biggest real estate project in recent history (the historic DC conversion), which is an HTC deal. And the laws passed under his last tax act significantly impacted HTC deals to the downside.
If he follows through on tariffs it will be very bad.
It's going be horrible for the supply chains.
Dude everyone knows that's Biden's fault
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