One of the few sectors that surprised us was energy. The United States actively reduced its exposure to energy, which has been very bumpy for real estate markets. Due to the wide decline in energy prices in 2015, the corresponding increase in property valuations has been significant. The new president will have his hands full dealing with oil-producing countries because of the recent 9/11 decision.
Many real estate investors are beginning to reduce risks by reducing their exposure. For the last two months of 2016, the feds have been hinting at raising interest rates. Growth prospects had been reasonable prior to these talks. However, current growth indicators suggested that the economy would remain flat after a weak start to the new year. The result of the rate increases will result in a significant setback to the prospects for the real estate market. How will the new president work with the feds on interest rate changes?
Real estate investors may decide to reduce the related risk as much as possible. Assessing the impact on the economy remains difficult. So far, investors have relied on the interpretation of the leading indicators, but no one knows how the next president will affect them. Monthly retail sales figures, growth rates and other market indicators have been interpreted as pointing to future growth. Please note that our economy has high exposure to China. How the new president will handle tariffs and trade is still up in the air.
Trump claimed that his tax plan would lower taxes for working and middle-class Americans. Independent reports have shown that under Trump’s proposals, all income groups would see a tax cut on average. However, “average” does not mean everyone. A new analysis estimates that his plan would actually increase the tax burden on millions of low- and middle-income families. This could result in an increase for low-income rentals.
Rather, the Clinton plan would provide some new tax subsidies for middle-income households with specific financial challenges, such as high medical or educational costs. However, these subsidies would not do much to boost the economy, at least in the short term. Also, your tax increases on businesses and high-income households would likely reduce his incentives to save and invest. This could result in higher demand for middle-income rentals.
We do not believe that the current state of the real estate market can be accurately projected into the future. Clear discussions about the interest rate and what the new president will do have yet to be evaluated. Therefore, the consequences for the real estate market cannot yet be properly assessed. Uncertainty about the future and the effects on the US economy could cause a significant slowdown in real estate investments. Risks that large could result in a contraction in investment and ultimately affect wealth and employment levels and consumer confidence. A decrease in earnings could be an additional implication. Although there will be a “new” government, we see a significant probability of political instability. The United States will face economic uncertainty for several years.
source : Mainland Chinese buyers are expected to snap up increasing amounts of overseas real estate this year, despite political resistance and sensitivity around such investments globally