How Will Joe Biden as US President Affect Real Estate
Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
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How Will Joe Biden as US President Affect Real Estate
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Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
5yFocus on deal flow and your criteria. Everything else is noise.
188 Replies
- Albrightsville, PA · Member since 2018 · 118 posts · 79 votes5y
@Tchaka Owen the question is what will people do because they are worried about higher taxes that effect the cost everything and wether or not they hold on tighter to their money. If that happens the market slows. Biden was part of the almost nothing that Obama did to reduce the impact of the last crash.
- Member since 2020 · 4 posts · 0 votes5y
I heard biden was looking to get rid of the 1031 exchange.
- Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes5y
Originally posted by @Shane Ward:
@Tchaka Owen the question is what will people do because they are worried about higher taxes that effect the cost everything and wether or not they hold on tighter to their money. If that happens the market slows. Biden was part of the almost nothing that Obama did to reduce the impact of the last crash.
Two things:
1. You're making a comment that's clearly based on your political opinion as opposed to accuracy and given that my education is in politics, we can take this discussion off-line (BP isn't so hot on political discussions) and I'll gladly help you see things clearly.
2. If you take the time to read the OP and my response, it is unlikely that tax changes will affect the majority of us. Others have chimed in as well. This isn't to say no one will be affected, but that most of us here won't. Market slowdown at this time is much more an issue of Covid-19 than of any potential policy of Biden.
- Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes5y
Originally posted by @Tchaka Owen:
Originally posted by @Shane Ward:
@Tchaka Owen the question is what will people do because they are worried about higher taxes that effect the cost everything and wether or not they hold on tighter to their money. If that happens the market slows. Biden was part of the almost nothing that Obama did to reduce the impact of the last crash.
Two things:
2. If you take the time to read the OP and my response, it is unlikely that tax changes will affect the majority of us.
So you really think getting rid of the 1031 won't affect the majority? 90% of the sellers I work with sell in reliance on it.
- Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes5y
Originally posted by @Steve Morris:
Originally posted by @Tchaka Owen:
Originally posted by @Shane Ward:
@Tchaka Owen the question is what will people do because they are worried about higher taxes that effect the cost everything and wether or not they hold on tighter to their money. If that happens the market slows. Biden was part of the almost nothing that Obama did to reduce the impact of the last crash.
Two things:
2. If you take the time to read the OP and my response, it is unlikely that tax changes will affect the majority of us.
So you really think getting rid of the 1031 won't affect the majority? 90% of the sellers I work with sell in reliance on it.
Do you think I have time to waste writing random comments? This isn't all about you. So start thinking big picture.
And if we were to make this about you (and focus only on 1031s instead of the entirety of the OP), all 90% won't stop doing business because the 1031 disappears.
@Travis M.by printing money and increasing the value of assets you also need to watch and worry about decreasing the value of your dollar. That’s the problem in Canada right now. We have printed too much and devalued our dollar which makes our materials very expensive.
Originally posted by @Russ Wahl:
@Travis M.by printing money and increasing the value of assets you also need to watch and worry about decreasing the value of your dollar. That’s the problem in Canada right now. We have printed too much and devalued our dollar which makes our materials very expensive.
Couldn't agree with you more on that. But we will just keep pretending that the CPI represents "real" inflation as the price of everything except consumer goods goes up 10% per year.
- Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes5y
Originally posted by @John Casmon:
Originally posted by @Luka Milicevic:
My guess:
He is a seasoned politician. A lot of bark and not a whole lot of bite.
Billionaires will continue to pay less than their secretaries, corporations like Amazon will continue to have shell companies overseas and not pay any taxes.
Government is just a partner that you don't want, but have to have. Whatever they do, we will adapt, achieve and overcome.
Real estate has been a good investment vehicle since the beginning of time and will continue to be until the end of time regardless who is in charge.
Agree here. I looked up Biden's biggest campaign donors and two of the top four were Deborah Simon (of Simon Malls) and George Marcus (of Marcus & Millichap). I'm not implying that this means anything, but my guess is he will at listen to these two, if not the rest of the industry.
Even on the left... the top 1% is not letting him touch 1031 exchanges. He talked about it a little bit to shine light on Trumps tax returns but that's all we are going to hear about it.
- 5yZoekia KellerPro MemberInvestor · San Diego, CA · Member since 2019 · 4 posts · 4 votes
@Mike Dymski preach!
- 5yZoekia KellerPro MemberInvestor · San Diego, CA · Member since 2019 · 4 posts · 4 votes
@Wale Lawal regardless of who is in office, senate, house etc. One thing is for sure real estate sells in hot markets. Always pay attention to migration and you will make money brother.
- 5yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
First of all thanks to everyone for their contributions. Forget agreeing or disagreeing, but I love seeing other peoples thought processes. As you well know there are very few people in our daily lives that we can have these types of REI conversations with.
Quick answer on Biden presidency. Very little impact on Real Estate short term or long term. As folks have mentioned both party backers are rich and invested to some degree in Real Estate.
Let me pose your question a different way. How do you rank the Biden presidency versus the following:
a. Biden Presidency- 1031 discontinued- I’m from Iowa. Most 1031’s are done with Farm land out here. 160 acres at $7,000 is $1,120,000. This isn’t abnormal “out here”. Dirt rich, cash poor. If 1031’s went away, the property just wouldn’t shift as fast.
Iowa Farm ground 30,600,000 acres, just farm ground. 92% owned by people versus government or other programs. 47% owned by women. 39% owned by Trusts, estates, Corporations, LLC. Average age of a farmer, whether they own land or not is 57 years old. Assume a Basis of $1,000 per acre, just picked a figure, ours is $500. $7,000 less $1,000 means a gain of $6,000 per acre.
30,600,000 acres x $6,000 step up= $183,600,000,000. Just for kicks multiply that time 30 states; and you have a lot of potential Cash/investment not flowing around.
b. Biden Presidency- Eliminate Stepped up basis- Take the $183,600,000,000 just for Iowa. Take it against 30% tax rate just for discussion. $183,600,000,000 x .3= $55,080,000,000 estate taxes, due to no stepped up basis. Some of this would not get taxed if Estate tax limits are not rolled back. Impact on real estate would be most family farms would go out of business cause they have to sell the farm to pay taxes; and corporate farms would take over. This is already occurring, just slower.
c. Socialism- in the above example, again just for kicks. Realize the numbers aren’t “right” to the nth degree, but the point is the same. Take 30 states x 30,600,000 acres x $7,000= $6,426,000,000,000. So $6.4 trillion; TAKE it from them, 100% tax. US population 330 million rounded.
This is just the farm ground, not equipment and houses. If you take 100% of this; then the populous gets $19,472 each. Unfortunately they won’t get anything directly, it will go through the government to pay down the debt which is $27 trillion versus the $6.4 trillion above and the $27 trillion is the “little number”.
Luckily the government will own the ground and someone will still be producing food. Not true. People don’t work when there is no incentive. No incentive to own Real estate if it can be taken from you. High impact to owner/low probability??/ low impact to national debt.
d. Retirement- Baby Boomers- I will turn 60 this year. I am at the very end of the Baby boom from WWII. 71 mm people, between 56-74 years old. That’s a lot of houses to be sold. A lot of Retirement homes to be built, or a new model developed. A lot of medical supply and floating RN, home support, PT offices needed or not. Impact to Real Estate, disregarding the Tax discussions, will be a higher churn in houses. With an increase in Retirement homes. The question is, will there be a market for these “non starter” homes, plus out in small town America. To me the key to Baby Boomers is the following. If no changes to Medicare, Medicaid, SS, retirement age, etc (keep in mind these people vote); and the Support of workers to retirees 1 to 1 relationship. The workers will need to pay more in taxes and have less to invest in housing. We no longer have 3 workers to 1 retiree anymore.
e. Covid 19- Lets discuss REI. 1% of the population dies. Which is 1/100. Assume half of these people were living single in a home. The rest were in retirement homes or with extra family. Thus lets say 1/200 houses will need to be placed on the market. In our area, this is the hottest real estate market we have known. 1/200 houses would be digested without any impact to the local market. My empathy goes out to all impacted.
f. Ethnic groupings- Lets discuss REI. There is no way to talk about this dynamic without Racism. First I see no changes in the dynamics of Racism occurring, no matter who, what, etc occurs. The wrong issues are being worked on. With that said, I see no “Change in racism” impact to the real estate market. But, yes the Racial/Ethnic mix is going to change.
Caucasian- 60.1%
Hispanic- 18.5%
Black- 13.4%
Asian- 5.9%
Less Caucasians and more of the sub groups. With Hispanic growing the most. The Caucasian and Hispanic groups will move about 2% points in the next 10 years, subject to immigration changes. Don’t really see a near term impact from Ethnic groupings. Folks realize Racism is a hot topic right now, but that’s another discussion. My concern goes out to all impacted.
g. Interest Rate- Lets say 3% now. I am in Self Storage. At 7% I hesitate further investments. At 9% I stop investing. Each portion of REI is different. Example: If I was a flipper, I would keep going. Don’t see this changing in the near future. The only Pendulum item that could rapidly swing this, is if the world loses “Faith” in the US dollar. After all, its just a piece of paper. Then cash would dry up and rates would skyrocket. Yes, this would create inflation and your hard assets would increase in value, but who cares, since no one could buy them, they are worthless.
h. Location/Location/Location- there will always be deals to be made under any scenario.
I. Income Tax rates- Lets say they go up to 70% for the wealthy with no loopholes. Two scenarios, if you lived in France, my friends family construction company, moved to Morocco. If you live in a Nordic country you stay, as long as you are a homogeneous group (little immigration).
j. Biden Presidency - Climate change- Lets discuss REI. forget whether you believe it or not, just go with the thought.
Climate changes- Nothing will occur to impact population shifts. 10 more hurricanes, 10 more tornadoes, 10 inches more or less of snow, 10 more forest fires, etc. Will not be enough to make people move.
Policy changes-
1. Less people, less carbon footprint. This isn’t going to happen. No China, “1 child policy” in the US. Big Impact; very low probability. Plus we are already doing that to a degree. We are at a net loss, other than thru immigration.
2. Significantly less fossil fuel- Not sustainable along with the American way of transportation. Cars would have to go. Mass transit put in place. Urban sprawl would have to be curtailed and reduced. Less Suburbia (small investors). More large housing projects (big investors/syndicates).
Also energy cost dictates World competitiveness in production. Currently most of the Midwest is around $.07 per KWH. If we move to $.21 KWH, then we become a totally consumer nation and at only a profit margin on traded goods of say 5%, we become bankrupt within a couple cycles. China strategically built the largest dam in the world. They have locked up $0 KWH for the next century regarding that dam. We can’t compete, staying Green, without Nuclear.
Lets add Nuclear. Goes against “green” even though its the cheapest and “cleanest???”.
Lets go Hydro/Solar/Wind- Hydro won’t fly because it goes against Green (kills Sturgeon and terns).
Solar/Wind won’t work, because you wouldn’t have a Coal based power grid, to utilize as a power bank and offset or an undiscovered/undeveloped grid based power bank system. All along the Coast and any mountainous regions can use Solar/Wind “Water reservoirs” as power banks.
Nuclear/Solar/Hydro/Wind, would have no major impact on REI, since they are all tied to the Power grid. Thus Housing would not need to change based on source of power.
3. Carbon sequestration- new one for most of you. Instead of reducing Carbon output, you increase Carbon capture through vegetation. Stop urban sprawl taking over Green areas. Take Farms and plant grass, trees and bamboo. To the degree this is done, the “Climate Change” impact is stopped or reversed in 20 years. REI- Farm ground becomes less valuable. Suburbia (small investors) is reduced. Large housing projects increase (big investors/syndicates).
You will lose the Midwest political Vote. Also if you take out our Corn/Soybeans out of the world market, a lot of third world people starve. Big Impact/Low probability.
k. (REPEAT) Location/Location/Location- there will always be deals to be made under any scenario, except all out Socialism.
Folks to further the conversation, if you challenge the data, provide your correct data and come to a conclusion. If you disagree with the concept, state why and propose a new one. If you disagree with the interpretation, provide a new outcome or degree of outcome.
Restatement, who the President is, has very little impact on the REI market. With the Three branches of Government, only policy change will make any of the above occur to a significant degree. I see none of the above good or bad occurring within the next 10 years. To me the only short term impact would be an implosion of the Stock Market; and next year due to pent up demand will be a great year for the economy. So you have at least 1 year to make hay while the Sun shines.
@Wale Lawal; Please take the above and rank or give input on what you consider the items to watch based on your REI background. Thanks.
- Houston, TX · Member since 2011 · 118 posts · 70 votes5y
Originally posted by @Sean T.:
@Wale Lawal great question to ask.
As someone who invests all over the US I look at long term trends, jobs, economic indicators, etc. My trepidation right now is how and where the move to cleaner/greener energy will show it's impact. Houston could be hit long term as an example. I think the knee jerk reactions will be mild but I do think it is worthwhile to look at the historical data.
I find that over the long haul water will always find it's level BUT the views(of both sides) have become so unpredictable I am looking for stronger caps/yields and trying to build in exit plans with more rigidity.
Good luck out there!
It's eerie in Houston at the moment. Commercial leases downtown have been broken left and right. Many of them oil related. It's not as bad as '82 yet. There's a lot of fear mongering going on about a "great reset", transportation restrictions, forgiveness of depth in exchange for abolition of property rights, yada, yada, yada. Stuff straight out of the communist manifesto. I'll believe it when I see it.
- Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes5y
Originally posted by @Travis M.:
@Wale Lawal
I think the Democrat’s self stated goal of printing as much money as possible will do what we have already seen - increase the value of assets.
Time will tell.
NETWORTH BUILDERS5236 Reviews - Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes5y
Originally posted by @Lina Bibikov:
@Wale Lawal It will be interesting to watch what happens with the rental market as government tries to prevent evictions. Also Biden says he’s trying to increase affordable housing, so he will have to work with investors in order to do that!
The rental market will still stay competitive. People will always need a place to live or for STR.
I'm still making moves and investing once the numbers works for me.
Happy Investing!
NETWORTH BUILDERS5236 Reviews - Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes5y
Originally posted by @Ned J.:
Way too much credit and way too much blame goes to whoever the President is in regards to the stock market and real estate prices
This is not completely true. People can see and analyze the economy of every administration.
NETWORTH BUILDERS5236 Reviews - Rental Property Investor · Topeka, KS · Member since 2017 · 23 posts · 13 votes5y
I believe he will be just an extension of the Obama years. With that said it will be bad for home owners but great for real estate investors. The other thing to factor in is how covid 19 is affecting the economy. I can already see it with a few of my tenants who are struggling just to make rent that hard times are coming for the average american. This really does break my heart.
- Member since 2020 · 22 posts · 20 votes5y
Originally posted by @Travis M.:
@Wale Lawal
I think the Democrat’s self stated goal of printing as much money as possible will do what we have already seen - increase the value of assets.
How’s that any different from the last 8 months of money printing and 4 years of aggressively calling for lower rates by the republicans? Seems both parties are doing exactly the same thing, yes?
- Member since 2020 · 22 posts · 20 votes5y
Originally posted by @Account Closed:
The administration's affect on real estate will depend the unemployment rate and businesses shutting their doors due to COVID. I personally don't see much of a price decrease for homes in 2021. It takes a LONG time for homes to decrease in value. Its not a stock. Look at 2008-2015. Housing market started massive foreclosures in 2007 but the housing market didn't hit rock bottom prices unit 2015 in most areas.
I keep hearing people on this site say that but all available stats show prices had started going up by then. Do you have more detail? Genuinely concerned I’m missing some important fact.
Originally posted by @Walt B Philip:
Originally posted by @Travis M.:
@Wale Lawal
I think the Democrat’s self stated goal of printing as much money as possible will do what we have already seen - increase the value of assets.
How’s that any different from the last 8 months of money printing and 4 years of aggressively calling for lower rates by the republicans? Seems both parties are doing exactly the same thing, yes?
Did I imply otherwise?
- Member since 2020 · 22 posts · 20 votes5y
Originally posted by @Travis M.:
Originally posted by @Walt B Philip:
Originally posted by @Travis M.:
@Wale Lawal
I think the Democrat’s self stated goal of printing as much money as possible will do what we have already seen - increase the value of assets.
How’s that any different from the last 8 months of money printing and 4 years of aggressively calling for lower rates by the republicans? Seems both parties are doing exactly the same thing, yes?
Did I imply otherwise?
That’s the inference I drew, so trying to see if there’s a continuity. Assuming more of the same, I should be buying everything in sight knowing a year from now it will be another 20% higher.
From what I've read Biden wants to end the 1031 exchange. That will have huge impacts on real estate investing. Hopefully that piece of his tax plan is never implemented. If he does start taxing higher earners at his proposed tax rate increase i think it will impact the interest rates from private money lenders.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Wale Lawal:
Originally posted by @Ned J.:
Way too much credit and way too much blame goes to whoever the President is in regards to the stock market and real estate prices
This is not completely true. People can see and analyze the economy of every administration.
I think his point is that the President has less control than people attribute to them. Often the controlling party in congress is the opposite the President, so the other party may have equal power. The other factor is lag time in policy. It takes time for policy changes to have an impact, so what we see today is the result of policy from the past. The final wild card is natural events and luck. Disease, war, natural disasters and similar can change a Presidents trajectory.
- Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes5y
Originally posted by @Walt B Philip:
Originally posted by @Account Closed:
The administration's affect on real estate will depend the unemployment rate and businesses shutting their doors due to COVID. I personally don't see much of a price decrease for homes in 2021. It takes a LONG time for homes to decrease in value. Its not a stock. Look at 2008-2015. Housing market started massive foreclosures in 2007 but the housing market didn't hit rock bottom prices unit 2015 in most areas.
I keep hearing people on this site say that but all available stats show prices had started going up by then. Do you have more detail? Genuinely concerned I’m missing some important fact.
Thanks for the chart
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