Unpacking the Meaning of a Trump Administration for Apartment Housing

Source: Unpacking the Meaning of a Trump Administration for Apartment Housing

Uncertainty dominated the commentary written by key real estate analysts trying to forecast how the apartment industry and economy overall will be affected by the election of Donald Trump as the next U.S. President.

Most industry groups, admittedly, said they were caught off guard by the result, and they, no doubt, will continue to analyze the situation between now and Inauguration Day.

While it is too soon to speculate what impacts the Trump Administration could have on the industry and the broader economy, following is a summary of thoughts and projections expressed during the week following the Nov. 8 election.


One sure bet is that NAA will work with the new administration.

Says Gregory S. Brown, NAA Senior Vice President of Government Affairs, “The outcome of the 2016 elections has dramatically changed the political landscape in Washington and the outlook for policy priorities of the apartment industry. We have one-party rule for the first time since 2010. That could mean accelerated consideration of numerous high priority Republican policy priorities, some of which impact the apartment housing industry. NAA looks forward to working with the new Administration, newly-elected members of Congress and returning incumbents of both political parties on critical housing concerns like flood insurance, tax policy and regulatory reform.”

Apartment Market / CRE Fundamentals

KC Sanjay, Senior Real Estate Economist, Axiometrics, believes the apartment market will perform well during Trump’s first term with average occupancy rates close to 95 percent and rent growth exceeding 3 percent from 2017-2020. “New supply is expected to average about 330,000 units per year during the same time period,” Sanjay says. “But higher GDP and job growth, as Trump predicts will happen, could mean rent growth and occupancy increase by an extra 50-100 basis points.”

“It’s important to remember that many economists have a mild recession built into their models within the next 18-24 months, regardless of who is at the helm.” said Paula Munger, NAA Director Industry Research and Analysis. “That’s obviously a downside risk to the apartment industry, but the demographic fundamentals are still pretty solid.”

The Real Estate Roundtable, one of the CRE industry’s most active lobbying groups, said in a statement that the major planks of tax and financial regulatory reform, infrastructure investment, immigration issues, energy policy and physical and cyber security will all present opportunities to advance the economy and the stability of U.S. real estate markets.

According to Roundtable CEO and President Jeffrey D. DeBoer, “Real estate public policies are non-partisan. They should be based on objective economic principles, responsive to changing economic cycles and sensitive to societal demands.”


Sanjay adds that stricter immigration laws are imminent. In the short-run, displacement of population could reduce national consumption side of the GDP equation. For the apartment market, more immigrant renters may double up, reducing occupancy.

“Over the past ten years, approximately two-thirds of new renter households were foreign-born and minorities,” Munger says. “Stricter immigration policy would absolutely impede that growth moving forward, but we just don’t know how much yet.”

During an interview Nov. 13 on 60 minutes, Trump said he planned to immediately deport 2 million to 3 million undocumented immigrants who “have criminal records.”

Trump added that after securing the border, his Administration would make a “determination” on the remaining undocumented immigrants in the country “after everything gets normalized.”

According to The Washington Post Fact Checker, Trump likely gets his estimates from a Department of Homeland Security fiscal 2013 report stating that there were 1.9 million “removable criminal aliens.”

Tax Policy

Randyl Drummer, CoStar, Senior News Editor, Los Angeles, weighed in on tax policy. “Most of president-elect Trump’s proposed policies on corporate, individual and foreign taxes have been widely embraced by the real estate and financial industries, with the exception of Trump’s vow during the campaign to scrap the deduction for carried interest income.”

Drummer adds that previous guidance provided by the Trump campaign reported that Trump’s tax reform plan would reduce marginal tax rates on individuals (top rate of 25 percent) and businesses (top rate of 15 percent), increase the standard deduction to nearly four times current levels, and put a cap on existing tax breaks other than mortgage interest and charitable giving.

“Regarding real estate ownership and investment, Trump said he would tax long-term capital gains at a maximum rate of 20 percent, impose a ‘reasonable cap’ on the deductibility of business interest expense, and tax carried interest as ordinary income,” Drummer writes.

Economic Impacts

Economists considered that potential Trump policies could put additional dollars in consumers’ pockets and therefore increase consumption to help boost GDP, and perhaps job growth. This would occur, for example, through potentially less cost for health care (for citizens and employers), child-care tax credits and higher wages for low-skilled workers.

“Trump said he also plans a $1 trillion infrastructure spending program over the next decade that could boost construction, and he also supports energy independence under his America First energy policy approach, and is expected to seek to ease restrictions on new off-shore drilling and fracking … and increase domestic natural gas production and revive U.S. coal mining,” said Drummer.

Sanjay adds, “[we expect the apartment market – and the economy – to be generally positive during the next four years, even though unexpected outside shocks could muddle things up.” If the economy-stimulating policies that Trump espoused during the campaign occur, a recession could be averted, according to Sanjay.

Based on published reports from Axiometrics, CoStar and television program 60 Minutes, with additional input from NAA staff; DeBoer comments reported by CoStar.


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