President-elect Donald Trump started his career in real estate. His father was a real estate tycoon, and he has made a fortune building or licensing his name to luxury condominiums, hotels and casinos. But will that experience enable him to help the middle class, which faces a lack of affordable housing and rising prices?
“One part of the struggles of the middle class that came through in this election was that they can’t find good affordable housing,” said Kevin Finkel, executive vice president at Resource Real Estate, a Philadelphia-based real-estate investment trust (REIT) that focuses on midtier rental apartments in post-election commentary. “But you didn’t see any discussion about the supply of affordable housing during the campaign,” Finkel said.
Nela Richardson, chief economist at Redfin.com, a Seattle real-estate research site, concurred. “America’s growing housing crisis… is a singular issue that cuts across all segments of voters,” Richardson said. “Every voter is a housing voter, and as a country we need the new Trump Administration to enter a new chapter in housing policy,”
Trump had little to say on the campaign trail about housing, other than wryly observing that even if he lost his bid for the coveted 1600 Pennsylvania Ave.address he could always stay at his new glittering $200 million Trump Hotel four blocks down from the White House.
“If I don’t get there one way, I’m going to get to Pennsylvania Avenue another,” he joked at the Sept. 26 presidential debate. His newfound blue-collar supporters from Pennsylvania, Michigan and Wisconsin might find a stay there a stretch, with rates for rooms starting at more than $500 a night.
In fact, Redfin’s Richardson said that in the past developers like Trump focused on attracting wealthy new residents by building expensive condos in the city center and ignoring the needs of a growing working class that demanded affordable housing. “Homeowners that have enjoyed a 30% windfall in property values since the housing bust steadfastly re-upped on restrictive zoning practices that crippled housing supply even more,” she said.
Trump’s properties too weren’t immune from a glut of top-end luxury housing, as a Redfin analysis of Trump condos in the first half of 2016 showed his brand falling back to par with the rest of his competitors when it came to pricing power in most cities outside Manhattan.
In the short term, the shock of a Trump victory will be both a boon and drag on confidence of American home buyers, said Ralph McLaughlin, chief economist with Trulia.com, a San Francisco-based real-estate research site, who said there will be short-term impacts on the so-called “Costly Coasts” dominated by upscale liberals, and the “Bargain Belt” of more blue-collar housing markets.
“Home buyers in economically healthy blue states will likely be rattled and more hesitant about the future of the U.S. economy, which will curb their interest in making large investments,” he said. “In economically stagnant red states, on the other hand, home buyers will likely feel a surge of confidence that could bolster demand.”
Still, in his acceptance speech early in the morning on Nov. 9 in New York, Trump, 70, sounded more like an old-school Democrat, promising dramatic new investments in infrastructure, which could boost demand for housing the way giant Depression-era Works Progress Administration projects like the Golden Gate Bridge and Hoover Dam created relocation opportunities for skilled workers.
“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump told his supporters. “We’re going to rebuild our infrastructure and we will put millions of our people to work as we rebuild it,” Trump said.
“If President Trump is successful in launching massive rebuilding programs in inner cities and for aging infrastructure across the country, it could have an impact on home building by consuming a lot of available building materials and skilled labor,” said Rick Sharga, executive vice president of Ten-X.
Before he is considered a champion of affordable housing, though, it’s worth noting that in the early 1970s, Trump and his father were sued by the U.S. Justice Department for alleged racial discrimination against blacks seeking apartment rentals in 40 properties they owned in New York. The suit was settled without any admission of guilt, though rival Hillary Clinton hit on it repeatedly in their first debate clash. Trump hit back by touting his legal effort in the 1990s to open Palm Beach resorts to minorities such as African-Americans and Muslims at his Mar-A-Lago resort.
Sharga said the key to the housing market fully recovering depends on more jobs and better wages driving household formation and home ownership, which Trump promises to improve. “If President Trump is half as successful as his plans call for, the housing market will soar,” he said.
By : Daniel Goldstein