What Everybody Ought to Know About Real Estate, Romney and Obama
The housing crisis has been one of the biggest stories in America over the last five years, but we have heard very little from either candidate on this important issue. In fact, a search for the term, Real Estate, at either candidate’s official website turns up no position statements. This is significant because the housing market has led us out of 6 of the last 8 recessions.
The real estate sector still has a lot riding on the November election. President Obama and Governor Romney offer significant policy differences on taxes, regulations, economics and small business that will affect the industry in both the short and long terms.
Economics plays a huge role in this election. With all of the uncertainty, many businesses held up decisions on capital, spending and hiring. These uncertainties include the fiscal cliff in January, unsettled regulatory issues and the implementation of the healthcare law. The uncertainty coupled with shifting market dynamics and tighter lending requirements has made business decisions tougher. $2.7 Trillion in commercial loans will be coming due by 2018. Many of these loans have balloon payments and were completed when lending terms were much easier than today.
One area that separates the two candidates is taxes. President Obama seeks to pass the “Buffet Rule”, a 30% capital gains tax for people making more than one million per year and eliminating loopholes. Governor Romney plans to reduce tax rates for individuals and corporations while maintaining the current capital gains tax rate. For those making less than $200,000, Romney would eliminate taxes on interest, dividends and capital gains.
Regulation of financial firms with the Dodd-Frank, was one of the signatures of President Obama’s first term and his major response to the housing crisis. Dodd-Frank resulted in a new government agency, tighter controls, more oversight and higher costs on banks and financial institutions. Governor Romney aims to repeal Dodd-Frank and replace it with another regulatory framework. In the first debate, Romney said that he would push for higher capital limits and leverage limits on all banks instead of designated banks. Both candidates agreed on the provision that sets mortgage lending standards. However, this “qualified mortgage” rule in Dodd-Frank has not been completed.
President Obama calls for increasing small business loans by easing the lending requirements and allowing more loans. Governor Romney wants to cut the program to spending levels that existed before the housing crisis. The President’s opponents said that his program will lend government insured money to businesses that should not borrow. The Governor’s opponents state that lower levels of funding may negatively affect office and retail occupancy.
Regardless of your political affiliation, most of us can agree that the election and the resulting policies will have a lasting impact on the real estate market. Millions of brave American have given their all to protect your right to vote. Please honor their sacrifice by voting in this election.
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