Politics can have both an indirect and direct impact on the housing market, and with promises to make big changes to the country’s economy, Biden’s plans may very well create a shift in the luxury market. Realtor.com’s chief economist says the strong performance of the luxury housing market in recent years is a result of both low mortgage rates and the performance of the stock market. Realtor.com says that while most of the Biden administration’s housing policies focus on affordable housing, events such as extending the federal eviction moratorium will affect the higher end of the housing market in the future.
“Most of our buyers are extremely wealthy and many of them own lots of property that they rent to tenants,” Mr. Rufo said. “If policies are put in place that reduce their ability to collect rent on multiple properties, that could have a negative impact on their net worth and willingness to upgrade into more expensive properties.”
Another political issue that’s already had a major effect on luxury housing markets is tax reform.
Tax Reform and the Luxury Residential Market
The Tax Cuts and Jobs Act that went into effect in 2018 has several provisions, such as lower tax rates, a higher lifetime estate and gift tax limit, and a higher standard deduction that are set to expire at the end of 2025. Democrats are anticipated to address those expiring provisions and other tax issues eventually.