Lessons from the Pros

Real Estate

Housing is Playing a Key Role in the Election (Part I)

First, no matter your party affiliation or lack of one, it’s important that you vote. I know sometimes apathy kicks in and we feel that one vote won’t make a difference, but every vote counts. Voting isn’t just a right, it’s our duty. With that being said let’s take a look at how housing might affect the election and how the Medicare surtax which is part of “Obamacare” ill affect our pocket book.

Housing directly effects the election in three major ways.  Jobs: both those created by the real estate industry and those that affects people’s confidence to purchase a home. Credit: the stabilization of standards and the ability of buyers to borrow funds. Taxes: homeowner interest deduction and how the Medicare surtax (put in place by “Obamacare”) will affect the sale of Real Estate.

Jobs – Federal Reserve Governor Elizabeth Duke commented that a healthy real estate recovery is needed for the strength of the overall recovery.  “When would-be buyers are worried about job security they aren’t thinking of buying a home.”

So what do the jobs numbers look like? According to an article in CNNMoney on Oct 19th unemployment fell unexpectedly to 7.8% in September, down from 8.1%. A survey of U.S. households showed 873,000 more Americans had jobs compared to a month earlier.  But the question is what kind of jobs?  CNNMoney states that the biggest hiring gains came in the form of part-time jobs, about 582,000 new part-time jobs were created in September.  The data shows that the age group of 16-24 year olds saw a huge pickup in jobs in September, due almost entirely too seasonal adjustments made by the Labor Department. Meanwhile, the employer survey showed the health care sector added 43,500 jobs, transportation and warehousing added 17,100 jobs and restaurants and bars added 15,700 jobs. Manufacturers however cut 16,000 jobs for the second month in a row.

What I find interesting is that the Bureau of Labor statistics projects an employment growth in of 12.2 percent in the Real Estate Industry by 2020.    This indicates to me that there is confidence, that the economy will continue to grow over the next seven years and hence the real estate industry will see growth as well.

Credit – NAR (National Association of Realtors) President Moe Veissi sees credit as being the biggest issue the real estate industry faces.  “We believe efforts that help creditworthy home buyers obtain mortgage financing and allow more people to stay in their homes or avoid foreclosure through streamlined short sales are important for a housing and economic recovery.”

Whether you think it’s wise or not, the majority of Americans largest asset and the foundation of their families’ stability is their home. Most of these homeowners could not achieve homeownership if it weren’t for mortgages, so credit is essential.

Elizabeth Duke also commented that, “Unfortunately, some buyers who would like to purchase a home are unable to do so because they cannot obtain a mortgage.” Duke goes on to say that “Tightening of credit standards is apparent in the credit scores of borrowers, noting that the median credit score of borrowers rose from 700 in 2006 to 760 in 2009 where it remains today.” This has made it more difficult for first-time home buyers to get mortgages, and first time home buyers fuel the growth of the real estate market and upward movement.  Lenders are still concerned with job uncertainty, which in turn makes them less likely to lend, which starts the whole cycle again.

Taxes – There are two lengthy topics that we will conclude in next week’s (Election Day) article.  The biggest issues I see are 1) the Medicare Surtax created through “Obamacare”  and 2) the possible elimination of the mortgage interest deduction.

There is an online Professional Real Estate class starting mid-November.  For more information contact your Education Counselor at your nearest Online Trading Academy center.

Great Fortune

Diana Hill


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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