Midterm Elections a Win for the Real Estate Market

By Ryan Dosen

 

The midterm elections are over and the news is good for the real estate market.  The National Association of Realtors (NAR) reports that “real estate issues stand to be well represented in Congress over the next two years as REALTOR® Party-backed candidates on both sides of the aisle won closely watched races in (this week’s) national midterm elections.” The victors are expected to do what they can in Washington to protect our somewhat fragile housing recovery.

 

Mortgage Interest Deduction

Massey Knakal Realty Services Chairman Robert Knakal said on Fox Business earlier this week that the biggest threats to the real estate market are interest rates and tax policy, including capital gains rates and the popular mortgage interest deduction.

The Wall Street Journal reported earlier this year that homeowners in the U.S. last year received roughly $70 billion in federal tax breaks through the mortgage interest deduction. The deduction makes homeownership more affordable by allowing homeowners to write off their mortgage interest payments every April. Detractors argue that the deduction benefits the wealthy and not the lower-income Americans that typically rent. This may be partially true, but if we’re looking for the housing market to continue to improve, removing the deduction would be a bad idea. Homeownership would be more expensive and difficult without the deduction and less homes would sell.

NAR reports that Realtor-backed candidates Sen. Mitch McConnell (R-Ky.), Sen. Pat Roberts (R-Kan.), Joe Heck (R-Nev.), Patrick Murphy (D-Fla.), and Krysten Sinema (D-Ariz.) all emerged victorious this week. In fact, whether Republican or Democrat, Realtor® Party-backed candidates posted more than a 90 percent win record in the midterm elections. McConnell is in line to become the Majority Leader of the Senate in 2015. NAR says that he “has been a strong supporter of the mortgage interest deduction, rural housing development, and other top real estate issues throughout his 30-year career.” McConnell and his NAR-backed brethren will be in a good position and have the numbers to make sure the mortgage interest deduction remains intact.

 

Corporate Tax Reform and the Real Estate Market

Nationally-syndicated consumer expert Clark Howard says that the new GOP-controlled Senate and House will likely focus some of their efforts on corporate tax reform. He says that big business has been moving overseas due to a convoluted and unfriendly corporate tax structure. Howard cited Burger King’s recent Canadian “tax inversion” as one of the more high-profile corporate maneuvers made to avoid America’s higher corporate taxes.  The idea is that if the corporate tax structure can be simplified and made more friendly, corporations will return to the States, thereby bringing more jobs and more overall tax revenue (despite generally lower tax rates).

Jonathan Weisman of The New York Times says that “Republicans want a simplified tax code to produce the same amount of revenue as the current one” and that this could lead to faster economic growth and increased tax revenues.

The economy is improving, albeit slower than we would like. Though unemployment continues to fall, many are still underemployed and we are not in nearly the same place we were in the mid-2000s. An improved and friendlier corporate tax structure could keep more jobs and tax money here in America. More jobs and more money circulating should lead to more people being able to qualify to purchase homes.

 

Strong September

NAR recently reported that September’s existing-home sales jumped and reached their highest annual pace of the year. Sales increased by 2.4 percent to an annually-adjusted rate of 5.17 million units. Though we have been playing from behind and operating at a slower pace than 2013 for most of the year, this is still good to see.

It is also good to see midterm election results that seem to indicate that Washington will be doing what it can to keep the real estate market on track and improving.

 

— Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams Brandywine Valley in West Chester. Contact Ryan Dosen for buyer or seller representation or for more perspective on the local and national real estate market by emailing rdosen@megillhomes.com or calling 610-399-0338. Please also visit The Wayne Megill Team blog at www.PAHomesAndRealEstate.com.

 

This article was published by 21st Century Media and the Daily Local News (West Chester, PA). To read this article on the the newspaper’s site, please visit the Daily Local News.

 

 

To view all of Ryan Dosen’s 21st Century Media real estate columns, visit http://www.dailylocal.com/search?text=dosen.