How Will the Presidential Election Impact Playa Vista Real Estate?
In case you have been living under a rock, there is a presidential election going on. It is a pivotal one, on which the country is very divided. Will Joe Biden get us back to the Obama-era progressivism that led to universal health care and a commitment to global cooperation to protect the environment or will we continue on the Trump train of the past 4 years that has seen tax cuts and the stock market reach new highs, albeit with a pandemic happening on his watch? Whoever ends up winning, there will be a distinct impact on real estate in Playa Vista and elsewhere.
If Biden wins, assuming a congress cooperative to his proposals, we can expect taxes to go up for businesses and individuals making over $400,000/year. This could put pressure on smaller businesses to cut staff or freeze wages. However, Biden has hinted at reversing some of the tax deductions, such as property taxes, that the Trump tax cuts eliminated or restricted. This could benefit homeowners in high cost areas such as the Westside. If Trump is re-elected, we can expect the status quo with taxes for the next four years and a more predictable economic recovery following the end of the Covid pandemic.
The impact on the stock market based on who wins could be more dramatic. When Trump was initially elected, the stock market, anticipating more tax-friendly policy and less regulation on business shot up significantly. This could be reversed by the election of Biden, reducing the on paper wealth of many homeowners and reducing the flexibility to purchase more expensive homes. This could have more of an impact on the higher end market, but with the average down payment for homes in Playa Vista close to $500,000, this reduction in on-paper wealth could cause values to stagnate initially.
One additional bright side to a Biden victory could mean greater confidence in buying real estate coastal and low-lying areas. With the continuation of a Trump presidency, it becomes a foregone conclusion that many of these properties end up under water. Sadly, this might be the case either way, eventually.
While some buyers are hesitant to purchase in election years, the years following election years (e.g. 2013, 2017) have typically been strong years in the real estate cycle. The measure of legislative predictability helps consumer confidence, which leads to more of a willingness to purchase. That could be different this year as the pandemic has resulted in intervention to keep interest rates unnaturally low in 2020, causing a rise in activity. Prices have gone up for most properties due to this and lack of supply. Unrelated to the presidential election, the regression to the mean might result in declines in demand and/or increases in supply.
However you choose to vote, the result will have strong implications on many aspects of your life, not only real estate value, which are impacted by many factors other that politics. It is hard to deny that the impact of taxes and the perceived profitability of businesses will effect hiring and financial decisions that do play a role in real estate supply, demand, and ultimately values.