The Trump Housing Bump: Built to Last or Purely Bombast?

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The following is an excerpt from an article that first appeared in the July 2017 Housing News Report, an award-winning monthly newsletter published by ATTOM Data Solutions.

Nearly six months into the tumultuous presidency of Donald J. Trump, an already red-hot real estate market is burning even hotter despite the lack of any major housing policy changes enacted by the new administration or its allies on Capitol Hill.

“We’ve certainly seen what the stock market has seen, the Trump Bump,” said Jason Hartman, founder and CEO of Platinum Properties Network, which helps real estate investors acquire income property across the country. “Since the election people have rushed into the market. I can feel it. We don’t have enough inventory to sell to investors.”

That low inventory combined with surging demand from investors and other buyers is continuing to place upward pressure on U.S. median home prices, which rose 8.7 percent from a year ago to $215,500 in Q1 2017 — the largest year-over-year increase in three years — according to data from ATTOM Data Solutions.

Bigger Bump in Trump-Won Counties

A new ATTOM analysis of 2016 presidential election voting results and six bellwether housing trends in 585 major U.S. counties shows that counties won by Trump have a slight edge in most housing market trends so far in 2017 over counties won by Clinton.

During the January-to-May period, median home prices in the 372 Trump-won counties including in the analysis rose an average of 4.3 percent compared to the same time period a year ago. The average home price appreciation in the 213 Clinton-won counties included in the analysis was 4.0 percent.

Home sales volume declined 0.7 percent annually on average in the Clinton-won counties during that same January-to-May time period while sales volume rose 0.5 percent in the Trump-won counties on average.

Counties won by Trump also have narrowly outperformed when it comes to home equity, with a lower share of seriously underwater homes — those with a loan-to-value ratio of at least 125 percent — at the end of Q1 2017 and a bigger decrease in seriously underwater share compared to a year ago, on average.

Foreclosure rates in Q1 2017 were slightly lower, and the year-over-year decrease in foreclosure activity was bigger in counties won by Trump than those won by Clinton.

Clinton-won counties did outperform in one housing trend included in the analysis: home flipping. The home flipping rate in Q1 2017 was higher and the annual increase in the home flipping rate was bigger in counties won by Clinton than in counties won by Trump.

More Data Supporting a Trump Bump

Did Their Part for Trump

But Trump-won counties also barely beat out Clinton-won counties in the final housing trend included in the analysis — the ATTOM Q1 2017 Pre-Mover Index, which anticipates the local markets poised to see the most home sales activity in the next 90 days based on proprietary loan application data.

At 136, the pre-mover index was well above the national average in Lee County , Florida, one of the five counties that Trump campaign pollster Tony Fabrizio credits with winning the election, according to an article in The Daily Beast.

“We figured we would do our part down here. I voted for him,” said Lee County Realtor Gloria Tate, who said she sees evidence of an increased interest from outside buyers coming to the region following the election — particularly from states won by Trump.

“The people that are coming here are mostly from the states that he won. …. Ohio has gotten stronger; Pennsylvania has gotten stronger for us,” continued Tate, who served on the Cape Coral city council for 10 years. “When someone gets in your car you have to hold your breath until you talk politics. That can break your sale right there. … Most of the people I take out are those who voted for Trump.”

Waiting for Promises to Become Policy

Ohio real estate broker Matthew Watercutter is willing to give the new president the benefit of the doubt and some time to enact his promised policies, but Watercutter said he is also more than willing to criticize any actions Trump makes that he disagrees with.

“I really think we’re going to cut through a lot of bureaucracy with him as president, but I think it will take a while to get there,” said Watercutter, broker of record and senior regional vice president at HER Realtors, the country’s largest agent-owned real estate firm that covers the markets of Cincinnati, Dayton and Columbus.

Cleveland (Clinton Country) Boom

But in the Cleveland metro area, the housing market in the central urban county of Cuyahoga — which was won by Clinton with 66 percent of the vote in 2016 — is out performing three suburban counties that were won by Trump: Lorain, Lake and Medina.

Ironically in light of Trump’s promises to restrict immigration, some of the lift in Cuyahoga County is coming from foreign interest in the city.

“People are coming here from all over the world, buying (rentals),” said Brian Stark, a real estate investor and host of a real estate-focused radio talk show in Cleveland. “You can buy houses in a decent suburban neighborhood … be in for 40 grand on a property that’s going to rent for $900 a month.”

Although Stark believes the forces now lifting the Cleveland market were already in place before the presidential election, he does see the election has helping to pour more gasoline on an already hot fire.

“I think the local real estate market did its thing. We have a very powerful healthcare complex here that is employing a crap-load of people,” he said. “Is it the election of Donald Trump the cause? I’m not sure. I think that the election came at a time when the economy was already turning around, but Trump used the inertia we already had to catapult the emotion. … He’s got the right timing. Everybody’s going to come in and say ‘Trump made it happen.’”

Read the full article.

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