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How politics influence the real estate business

Attila Szabo by Attila Szabo
January 26, 2022
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Several factors set up the rules of the real estate market game: government policies on price and demand, socio-economic factors, the role of demographics in property trends, and the presence of technology in real estate.

Make no mistake: politics and economy go hand in hand; one can not exist without the other. The current economic climate has always decisively influenced the real estate business. Politicians are elected based on their future economic prospects. Frequently, they invent futuristic financial blueprints, which, in most cases, have minimal to zero chances of being able to be implemented in reality. Their electoral speeches are but mere declamations, long shots used to win more votes. In the end, they will have to face the harsh reality and play the hand they were dealt with.

The upcoming article will shed light on the political factors affecting real estate and the intricate connections between politics and the real estate business. Do you wish to purchase a private property, and you are interested in how contemporary politicians are involved in setting up the price for your future home? Seek no further! We are here to answer all your inquiries!

Government policies altering price and demand

classic house against usa flag background

In real estate politics, laws, taxes, inflation rates, unemployment rates, economic growth, interest rates, and mortgages can influence the prices of homes. Another factor that had a negative impact on the housing market in 2020 was the Coronavirus pandemic and the race for a vaccine.

Laws passed by the government exert a significant effect on the value and demand of private property. Encouraging housing laws will lead to a temporary increase in demand for homes by government influence through tax credits, deductions, and subsidies.

The US political system planned out a general recovery since the 2009 Great Recession with a set of new policies that Congress passed. Policies ever since their adoption have been targeted toward maintaining a balance between limited resources and a rising tide of needs.

The ambiguity of funds

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America’s economy, as many specialists confirm, is often built on a crumbling infrastructure. The body responsible for the state legislature will have to make difficult decisions. Does it authorize funds to rebuild a road, or is the first concern to maintain a school lunch program? Does a local legislature approve funds to better a public community center at the expense of an expanded police force? Such questions have an impact on the real estate market because they affect the desirability of certain areas and communities.

“With fewer funds available for ‘discretionary spending, more often than not, public facilities aren’t getting a facelift, and local streets aren’t getting repaved.” (source The Huffpost)

Economic tight restrictions since 2009 have prompted many buyers and sellers of real estate to take into account a list of considerations they may not have had to reflect upon before. Today, the standard appears to be greater taxes, a lower range and quality of public services, and overall higher living costs.

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Government shutdown leads to instability in the housing market

impact of coronavirus on economy and financial assistance

Certain government rulings can directly influence the real estate business.

A thought-provoking case study was published on a government shutdown of several public institutions affecting the housing market, as reported by Getsmarter.

The United States government shutdown meant an ingenious blow to the real estate market. In 2019 more than 800,000 federal workers in nine different departments and agencies were adversely affected, including the Housing and Urban Development sector. On this subject, 2,211 members of the National Association of Realtors compiled a communique. In it, they pointed out that 11 percent of their specialists declared that the closing had an impact on their current clients, and 11 percent claimed there was an impact on their potential clients. Of those affected by the impact, 25 percent had homebuyers that experienced buyers remorse due to government unpredictability.

How Covid 19 affected the housing market and politics

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Not only politics can influence the housing market in a direct way, but it goes vice versa too. Now, let’s have a look at how the pandemic affected the real estate business. Not even a year has passed since the pandemic breakout, but the world has gone mad on the housing market in certain states: panic selling, irrational buying, nervous markets, home offices, etc. according to Forbes journalists. The yearning grew to obtain more space for less investment. The present Covid-19 epidemic is one of the most hysterical and erratic real estate markets in a long time.

On the road to more affordable homes

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Locally, single-family-based suburbs are back en vogue Overpaid and hyped-up condos in New York and other great cities are no longer a thing. American citizens hit the road searching for warmer, healthier, and more economical places where they can work remotely. Therefore, North Carolina, Georgia, Texas, Arizona, and Nevada became extremely popular relocation centers. According to Forbes journalist: “This COVID-catalyzed migration wave will have outsized consequences for housing prices, infrastructure, and jobs nationally as well as locally.”

Don’t forget, despite all, keeping your mental and physical health is the most important!

A surprising change in the political and housing scenery

Several months before the upcoming political elections, both Republicans and Democrats expected that the emerging factors of immigration, generational replacement, and national migration trends could change the national electoral map permanently for a generation. In other words, migration changes blue states into red ones. There were talks about Washington DC becoming the 51st state.

Since Covid-19 jump started the housing market into high intensity, the political turning point looks like it’s here far sooner than expected. An interesting case was the Miami Housing Market, which broke records.

In short, COVID is uprooting and moving people around like natural disasters (for instance, hurricanes), and this chain reaction can be noticed on the transformation of political maps. Experts acknowledge that the most surprising part of the new real estate condition of the national epidemic might be political.

Millions of Americans relocated in 2020, as nationwide cities entered a general lockdown. Because of COVID-19, these were switching their larger houses to lower cost of living homes that provided a more pandemic-friendly lifestyle. Data from the real estate website Redfin show a 25% year-over-year increase in single-family sales transactions and a near doubling in mortgage applications. Selling a house during the Covid pandemic itself underwent significant changes too. Most of all, agents have to raise awareness of physical and hygienic safety.

The pandemic and the ensuing shift in population implemented changes to the Electoral College, Congressional Seats, and overall political geographies.

Electoral College and Congressional Seats are directly connected to population growth compared to the rest of the country. Faster growth means greater chances to win more seats in Congress. Thanks to the pandemic, places like Texas, Arizona, Nevada, etc., are expected to gain additional Congressional seats and, subsequently, more substantial Electoral College power.

Conclusions

Understanding the current political climate, the factors affecting the real estate market, and drawing the correct conclusions having political factors in mind is quintessential unless we wish to be influenced by rabble-rousing. Be smart and think in perspective! Is the neighborhood you decided to move to an organically developing area? Are local authorities allocating adequate funds into public infrastructure? How much is the average cost of living? Consider all these questions before moving forwards! Therefore, you will be able to observe changes in supply and demand in the housing market of 2021. You are not alone in making the most intelligent investment choice!

If you enjoyed reading this article, don’t be shy and share it on LinkedIn, Facebook, and Twitter! And don’t forget to follow us on social media!

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Attila Szabo

Attila Szabo

Attila takes a passion for marveling at classic real estate and modern buildings throughout the old continent. This interest gave birth to his study of the real estate market with its ins and outs. His other endearing hobby is discussing motion pictures and reading contemporary literature, such as comic books. Not surprisingly, he elaborated a method to combine the two pastime activities mentioned above. He strives to visualize how certain buildings could host film shootings, how they would influence people’s lives to find the match made in heaven both for inhabitants and their future homes.

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