The 2016 presidential election is coming to a close, with less than three weeks to go. While the latest polls show Hillary Clinton has opened up a large lead, it is worthwhile to examine the economic proposals of each candidate in order to determine the impact on the housing market.

Hillary Clinton’s proposals

In keeping with her reputation as a policy wonk, Secretary Clinton has outlined her proposals on various economic issues, such as taxes, jobs, and housing. Her previous record in the Senate also provides some insight into her priorities.

Her policies are designed to stimulate economic growth in a budget neutral manner. In general, she is calling for higher taxes on high earners, while cutting taxes on small businesses. Clinton also supports a plan to invest in infrastructure, manufacturing, research and technology, clean energy, and small businesses. The Democratic nominee is also proposing students from families making below a certain level having the opportunity to go to a four-year public college or university tuition-free.

On the housing front, she is calling for expanding the supply of affordable rental housing units and removing barriers to obtaining home ownership (including matching a $10,000 down payment for working families, updating underwriting tools, and clarifying rules for lending requirements).

Overall, we think her policies support a moderate pace of economic growth, which should be beneficial for the overall economy and the housing market. Although she will not support the laissez-faire policies espoused by previous Republican administrations, she will likely be a voice of moderation, advocating a degree of regulation in order to have a level playing field and keep the economy functioning. Back in May, during the primaries, a panel of more than 100 housing experts put together by Zillow stated they believed a Clinton Administration would have a positive impact on housing prices

Donald Trump’s positions

It is more difficult to ascertain which policies a Trump presidency would pursue, given his penchant for making outlandish and inconsistent statements, along with his lack of political experience. These would be negative for the economy and stock market, given the uncertainty surrounding his presidency. Ultimately, this likely translates into a weaker housing market. A weaker stock market has a direct impact on the New York City housing market given it is a major money center.

The policies he has laid out are vague, lacking many specifics. He is calling for efforts to boost the GDP growth to 3.5%, and possibly 4%. This is well above the current rate, which was under 2% in the second quarter of 2016. He has called for reducing marginal tax rates, and reducing the tax brackets to three, down from seven. The top tax rate would be 33% compared to over 39%. The same economists mentioned previously believe a Trump presidency would hurt home prices.

His tax plan could provide a short-term economic boost due to the expansionary tax cuts. However, experts, including the non-partisan Congressional Budget Office (CBO), believe this would cause the deficit to soar. This could cause interest rates to increase down the road, raising mortgage rates, which would suppress housing demand, and ultimately prices.

Conclusion

The election season naturally breeds uncertainty, and this is a more unusual one than in recent memory. While we will have a new president next year, the fate of Congress, and whether control will switch parties to the Democrats, is up in the air. With all of the unknowns, any policies currently discussed in their campaigns should be taken with a grain of salt. It is a long road from discussing a policy as a candidate to the passage of a law.

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