After Election, What Happens to Housing Issues?

November 4, 2016

The future of housing policy would be more predictable under Hillary Clinton than Donald Trump, two housing experts said Friday during the Regulatory Issues Forum at the REALTORS® Conference & Expo in Orlando, Fla.

Brian Montgomery and Jim Parrott discuss the potential impact of the election on the real estate industry at the Regulatory Issues Forum Friday.

That doesn’t necessarily mean Clinton would be a better president for the real estate industry, but because of her close ties to President Barack Obama, it’s not hard to guess how she’ll preside over housing issues, said Brian D. Montgomery, vice chairman and co-founder of The Collingwood Group LLC, a Washington, D.C.-based business advisory firm. “I think maybe [with Clinton], you could expect more of the same,” said Montgomery, a former advisor to President George W. Bush and former Federal Housing Administration Commissioner.  “I think [Trump] understands the machinations of a deal … but I don’t know how that would play out relative to your trade.”

Jim Parrott, senior fellow at the Urban Institute and owner of Falling Creek Advisors, which advises financial institutions on housing finance, agreed with Montgomery on the uncertainty of how a Trump presidency might change the housing landscape. 

“It’s like trying to guess what my 5-year-old is going to want for lunch tomorrow,” said Parrott, who’s previously held several positions in the Obama administration. “My lack of knowledge about where [Trump] would take the world in that particular space gives me some discomfort. I have no idea, and [housing] is such a precarious, complex, and important section of the economy.”

Other uncertain factors that might be causing market jitters are more legislative and regulatory in nature. Parrott said he wishes Congress and regulatory agencies would decide on a direction in regard to reforming government-sponsored agencies such as Fannie Mae and Freddie Mac, as well as proposed changes to Dodd-Frank. 

“It feels to me like we’re stuck in a sort of policy limbo,” Parrott said. “There’s a haze of uncertainty hanging over the mortgage market,” which, in turn, hurts the real estate industry.

Of course, the upcoming election could change the makeup of Congress as well. Montgomery predicted that if the Republican Party retains control of the House of Representatives and the Senate, they may try to make some moves in the housing space. “They want to get the government out of housing in general,” he said, noting Republicans may focus on winding down the GSEs or making changes to the Protecting Americans from Tax Hikes (PATH) Act. He said Congress might feel emboldened to act in the beginning of a new presidential term due to the void that occurs in the adjustment period after the lame duck session. “It’s kind of a blank slate.”

Both speakers agreed that the next president’s choices for Cabinet and advisory positions could make a big difference concerning the future of the real estate and financing industries. Montgomery predicted that Massachusetts Sen. Elizabeth Warren would take on a significant role if Clinton steps into the presidency, and that may mean a halt to proposed changes to Dodd-Frank. 

But Parrott said both major-party candidates would need a fair amount of advice on these important issues, which is why their staffing choices matter so much. “It will depend a lot on who they hire,” Parrott said. “Clinton is not a lifetime housing person, [so] she’ll listen to those who come to the table. I’m guessing with Trump, it will be the same.”

—By Meg White, REALTOR® Magazine