“Mr. Chairman, you have the floor”
With the start of the Republican National Convention now upon us, it seems like an appropriate time to speculate on the potential effect on property investors should the Republican’s win the Presidency. I specifically don’t say “if Mitt Romney” wins the general election, because for nearly a generation now, Presidents have been merely figureheads – puppets – of an extensive organization with a platform and a mission. Political parties’ main goal is to simply stay in power. The part about doing what’s right (or best) for the country is just dressing. If you think presidential candidates have some other form of higher calling, like, oh, say…service to the country – well…no. It’s the business of politics, and like property investing, it’s just another business.
So let’s say the Republicans take this one. What will the next four years look like for investors? If you’ll excuse the pun, conventional investment property advice will tend to be quite upbeat and positive on this subject. Not that the concept of lower tax rates for the wealthy is nothing to sneeze at, putting aside the right or wrong of the issue. Obviously, high income earners will benefit. But what will the residential housing market look like down the road with dashing Mr. Romney in office?
Breaking the logjam
I firmly believe a Republican President will immediately break the logjam in Congress. There has been such a glut of stalled, stalemated legislation over the past couple of years. With a majority in the House and a newly elected President, I think Republicans will generate a can-do energy, and push through many currently dead-in-the-water pieces of legislation, due to the long-standing uncompromising feud between the Democrats and Republicans in Congress.
So here’s the kicker: I just don’t think it will matter what the new laws enacted will look like. Simply getting the business of lawmaking rolling again can’t help but grease the wheels of our economy. (Social issues be damned, of course…but that’s not what property investing is about, right?)
The housing market will respond accordingly
The stock market always loves action combined with stability in the political arena. And I think so too will the housing market. I see a Republican win in November as benefiting the residential housing arena, enough to produce a backdrop of stability – with ripple effects reverberating through the U.S. economy. Job growth will probably continue in its anemic pace – but the notion that SOMETHING is getting done in Congress will have a very positive psychological effect on home buyers. And that should lead to increased demand, and a slow, but steady improvement in property valuations in most locales throughout the country.
Which means, of course, that any currently held property investments will slowly start to rebound as well – as their valuations increase with less foreclosure properties on the market, continued low interest rates, and increased buying activity. Sound investment property advice is that it will be a great time to take out new mortgages, as credit markets will also view the increased movement in Congress quite positively, and banks should aid investors seeking new mortgage loans by freeing up increasingly more credit to the industry.
While my politics may not mesh very well with a Republican platform being hammered out this week at their convention, and while I continue to view Mr. Romney as a bit of a cartoon, my thoughts are that the Republican party makes sense for property investors over the next four years. Which means that I’m going to be having lots of fights with myself over the next three months over what ballot to select when I walk into that polling booth in November.
photos courtesy of live.boston.com, washingtonpost.com, channelguidemagblog.com, abcnews.go.com