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What’s Next? Post-Election Trends in Housing

Regardless of their political leanings, real estate professionals and investors small and large watched this year’s presidential election unfold with an eye to its effects on the US real estate market. Although housing wasn’t a particularly hot topic during the campaign, experts see some trends emerging in Barack Obama’s second term that may have an impact on home purchases, financing and the rental market.

Although news of the election results sent many rushing to protect their assets from a variety of perceived threats, the relative silence of both parties on the subjects not just of the recent mortgage meltdown but the future of the housing industry suggests that major changes may not be looming on the horizon. In fact, some programs and policies in place to help struggling homeowners and stabilize the housing market are likely to continue, affecting investors and homeowners alike.

As part of efforts to keep homes out of foreclosure, some real estate trend-watchers predict more opportunities for refinancing as well as relief for owners sinking “underwater” with mortgage debt. The government-sponsored HARP (Homeowner’s Affordable Refinance Program) was recently upgraded to include a broader range of eligible homeowners who can apply to refinance even if they are in trouble with mortgage debt.

The provisions of the HARP act are expected to help homeowners keep their houses, rather than going into foreclosure or being forced to a short sale – both maneuvers which would put more homes on the market. Like other mortgage relief provisions instituted by some major lenders, this program has the long-term effect of reducing the number of houses available to investors through individual sales.

The Dodd-Frank Act, which was partially implemented in Obama’s first term to impose some regulation on the financial industry, is likely to be fully in place for 2012 and beyond. The provisions of the Act include tougher lending standards in reaction to the lax, unregulated days before the mortgage crash of 2008-2011. Keeping these standards in place and implementing new ones mean that qualifying for mortgages becomes more difficult and reduces the risk of defaults.

Another aspect of the housing industry affected by a second term in office for Obama is the mortgage interest deduction, which allows home owners, either residents or investors, to deduct annual mortgage interest on their income taxes. The President has long planned to limit this deduction for those in the higher income brackets only, while keeping it uncapped for middle and lower class home owners.

For individual investors applying Jason Hartman’s strategies for successful income property investing, the new housing landscape looks much like the old one, with mortgages and properties still available across the rich and varied landscape of the US housing market.

The Heroic Investing Team


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