Georgia Senate results

[Arn Cenedella]

This is not a political post and I do not want political discussions on this thread.

What do you think the results of the Georgia Senate races will have on residential real estate investment particularly for multifamily investments?

Impact good or bad?

More Covid financial relief?

Additional eviction moratoriums?

The initial reaction of the stock market - futures are up - seem to like the result.

Again, no political rants, let’s just stick to business.

Good or bad for multifamily investors?

[Suvir B.]

Great question, @Arn Cenedella. Democrats controlling the senate will certainly make it easier for Biden to push his policy plans when he takes office. However, I feel there is an unwarranted fear about his plans. He might have some policies which hurt business, but like the stock market, I too am bullish on his overall impact on the economy and real estate.

OVERALL ECONOMY

Stimulus: with Democrats in power, we can expect to see more COVID relief, stimulus checks, small business relief and faster COVID control - all of which will help the economy in the short term (sidestepping any discussion of long term debt increases)

Infrastructure spending: most presidents promise this, but few deliver. If Biden lives up to his promises and boosts infrastructure spending on roads, bridges, etc. - it could help secondary and tertiary real estate markets grow faster

Economic Forecast: In general, I expect to see much higher short-term growth: higher stimulus package, lesser trade wars, focus on small business. The only caveat is i the new COVID variant spreads faster than expected - then more lockdowns (mostly in Blue states)/ slowdown is also likely in Q1 due to overwhelmed hospitals and delays in vaccine delivery 

Capital Gains Tax: could increase from 21% to 28%. However, even if the Democrats decide to make this a legislative priority, I don’t see it happening before 2022, which the economy is still in COVID recovery

REAL ESTATE

Eviction Moratoriums: these will likely be extended – my guess is until Q2 or early Q3 – when the vaccine(s) are widely available and business starts returning to pre-COVID levels

1031 exchanges: Biden has mentioned he will restrict these for people with > $400K income. But I feel that this is unlikely to change, even democratic senators will not agree to undoing a critical legislation which incentivizes RE development esp. housing

Opportunity Zones: both Dems and Republicans want to keep these. However, Biden has mentioned that he wants better transparency on affordability, poverty and job creation => so we can expect more reporting and regulatory hurdles in OZ

AFFH (Fair Housing): Trump suspended / ended it in 2018. Biden will likely reimplement it – leading to more apartment zoning in the suburbs. But this will likely impact in 10-15 years, not immediately

Mortgage Rates: Biden will let the Feds drive this, so I won’t expect much change for the next couple of years, at the very least

Green Building: we might see additional incentives for green buildings and green development loans, likely with lower interest rates or tax credits

[JD Martin]

My thoughts: no difference one way or the other. A 50/50 split is too close for anything too egregious in any direction to take place. In any event, the party in power makes little difference when it comes to investments. There's always something to make money on regardless of politics. Anyone who says different is just fearmongering. The Great Depression was rough on a lot of people but there were a decent number of people who made a lot of money at the same time. The Civil War was a bloodbath and yet the technological and mechanical innovations that came out were tremendous. 

[Steve Morris]

Depends, according to the Wharton report on Biden's tax goals he wants to end the 1031 and step-up in basis with death.

You tell me what that means to property owners.

As far as the stock market being a predictor, what do they say, "15 of the past 5 recessions have been predicted by the stock market?"

In the long run, like in 2009 when Ds owned the world, nothing long-term to benefit society will happen besides more taxes probably.

[Arn Cenedella]

@Suvir B.

As per usual, you provide thoughtful rational analysis.

I can’t disagree with any of your assessments. 

I’m not sure what will happen but it will be interesting to see it unfold.

Absent some drastic move, I am still looking to buy!

👍

[Jabbar Adesada]

@Suvir B.

Great Analysis!