How Election Results Could Shape Housing – Developments – WSJ
How Election Results Could Shape Housing
By Nick Timiraos
If the polls and pundits are to be trusted, Republicans will take back at least the U.S. House of Representatives in Tuesday’s elections. What will that mean for housing over the coming year?
Housing subsidies: A deficit commission could try to scale back hugely popular deductions on mortgage interest, which economists say have led to over-investment in housing. Such a move would generate a flurry of protest from the real-estate lobby. It’s hard to say whether Tea Party activists would embrace such a move as a debt-reducing measure or if they would reject it as a tax increase.
Analysts say that Republican gains, meanwhile, could put the brakes on any effort for a massive refinance of homeowners. Some economists have urged policy makers to remove constraints to refinancing in a bid to stimulate the economy, and one proposal would allow anyone with a loan backed by a government entity to refinance mortgages at today’s rates, which are at 60-year lows.
Such a program, however, could be expensive, raising costs for future borrowers because it would force mortgage investors to take a big hit. Banks, meanwhile, might require government agencies to give up the right to force them to buy back defaulted loans. Those repurchase demands have made banks much more cautious.
Well, the election is over. There is change in the air. But what change will it really be and how will it affect the housing market. We ask this question not just because we are Realtors but because the housing market has a significant impact on the over all economy.