Minnesota has seen one of the highest midterm election turnouts, and some local change is no doubt on the horizon as a result. In terms of the local elections, the impact on the Real Estate market would come about in both short and long-term city planning. City planning has a direct impact on the desirability and livability of each locale. Additionally, property taxes which are determined by local government bodies are a concrete item that directly impacts homeowners each year. Property taxes, which vary from county to county, are at times the final piece of the homeownership equation that either keep it in the realm possibility or shift it out of reach and unaffordable. In fact, increasing property taxes and other levies have proven to be a recent issue for Minneapolis retirees on a fixed income, as we wrote about earlier this year.
In terms of the nation, Inman has an article directly addressing the Midterm’s potential impact on the Real Estate market. With Congress once more being split – the House is now a Democrat majority, whereas the Senate still has a Republican majority – there may not be a whole lot that gets accomplished. The article rightly addresses the recent Tax Reform since that is one of the most tangible ways Congress has impacted the Real Estate market. For better or worse, the Tax Cuts and Jobs Act of 2017, along with increasing the standard deduction, limited state and local tax deductions (including property tax deductions) to $10,000 and mortgage interest deductions on all residences to $750k. These changes really only impact those whose itemized deductions surpass the newly increased standard deduction, and those who live in higher tax states, like Minnesota. With a split Congress and President Trump still in office, no monumental changes are expected in this department.
The article also asserts that flood insurance reform will likely go nowhere given the fact that it stalled out even late last year, without such a divided Congress. The National Flood Insurance Program is currently only authorized through November 30. If NFIP is not reauthorized by Congress in the next few weeks, more than 40,000 home closings per month could be impacted, according to estimates by FEMA. Lastly, the article states that an overhaul of the mortgage finance system – specifically Fannie Mae and Freddie Mac – is unlikely given the concessions required with the now split Congress.
And so, while it feels like the recent Midterms are going to bring about waves of change, due to the split makeup of Congress and the (most likely) resulting gridlock, much change should not be anticipated, especially when it comes to impacting the Real Estate market.
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