As I write this the morning after the election, the next president of the U.S. is still unclear. Polls that predicted former Vice President Joe Biden would win over President Donald Trump by a landslide couldn’t have been more wrong.
Now, the path to victory for Trump has become a much more real possibility in the eyes of many Americans.
As election day came to a close, key swing states including Nevada, Wisconsin, Michigan, Pennsylvania, North Carolina and Georgia were still uncalled.
And despite Biden still retaining a slight lead, some experts see Trump winning re-election.
“The final outcome of the U.S. presidential election and control of the Senate remain in the balance, but the widely-anticipated ‘Blue Wave’ appears to have floundered, with betting markets now making Donald Trump the favorite to win a second term,” Capital Economics Chief U.S. Economist Paul Ashworth said.
“The swing in the betting odds reflects Trump’s strong performance in Florida and some of the other southern states,” Ashworth said. “The only notable exception is Arizona, which Biden appears to have flipped quite comfortably. Trump also holds early leads in some of the key Midwest states too, but those results could easily change over the next 24 to 48 hours, as the mail-in ballots, which are expected to strongly favor Joe Biden, are counted.”
In the event that Trump wins the presidency, what would that mean for the housing industry for the next four years?
The fate of the GSEs
One of the largest impacts will be what happens to the conservatorship status of Fannie Mae and Freddie Mac.
When Trump appointed Federal Housing Finance Agency Director Mark Calabria to take the helm of the agency on Dec. 12, 2018, the director was very clear on his goals: remove the GSEs from conservatorship and define the FHFA’s role without them.
At the time, Calabria told HousingWire that the Trump administration is determined not to hand Fannie Mae and Freddie Mac in conservatorship over to the next administration, but cautioned that the process will not be easy.
The next step for exiting conservatorship appears to be the initiation of a public offering, which is projected to be the largest public share offering in U.S. history. Analysts have valued the offering between $150 billion and $200 billion.
The “offering” would be the 80% of Fannie Mae and Freddie Mac preferred stock held by the federal government since 2008. The remaining 20% trades over-the-counter.
Leading up to the election, there was talk of a race to initiate the offering before the November election. While that didn’t happen, some wonder if the administration will attempt to complete the offering by the end of this year.
Calabria has often stated, including in interviews with HousingWire, that he does not need congressional or any other approval in order to release the government-sponsored enterprises from conservatorship. That would seem to suggest that the results of the presidential election won’t matter in his decision.
Except that they do.
Some worry that a Supreme Court decision in June put Calabria’s job on the line. The ruling in Seila Law vs. the Consumer Financial Protection Bureau means the CFPB director now serves at the pleasure of the president, not as an independent regulator appointed to a five-year term who could only be removed “for cause,” meaning negligence or criminal activity.
The decision is seen as also impacting the FHFA, which is set up in a similar way and has a challenge pending in court related to its structure.
In the ruling, it mentioned the FHFA’s structure as an example as a single-director rule, but cited its differences from the CFPB. The ruling did, however, note the controversial nature of even the FHFA’s leadership.
For now, the FHFA continues to operate under the assumption that business will continue as normal. Just last week the FHFA released its strategic plan for 2021 to 2024, which continues to prepare Fannie Mae and Freddie Mac to leave conservatorship.
But a Trump presidency is needed in order to ensure the GSE conservatorship really will end.
HousingWire reached out to the FHFA, but it has not immediately responded for request for comment. This article will be updated with any new comments.
In an interview with our own Real Estate Reporter Julia Falcon, National Association of Home Builders CEO Jerry Howard said that lumber prices might be a wash no matter who wins the election.
“I think lumber prices would probably remain around the same and I’ll tell you why: If Trump wins, you’ll see a bigger effort to open up domestic harvests in our national forests and in the private forests,” Howard said. “But you probably won’t see the conclusion to the Canadian stuff with lumber prices.”
NAHB did not make a presidential endorsement, however it listed its congressional endorsements, which included many Republican candidates. NAHB stated that its “non-partisan endorsements are based on the candidate… views and actions on policy and legislation most important to the home building industry.”
The Trump campaign hasn’t spoken much about housing issues, he has however, shown over the past 3.5 years how he approaches the industry. For example, at the beginning of his presidency, Trump signed an executive order, mandating that two regulations must be eliminated for every regulation created. He has also ended several Obama-era regulations such as certain fair housing regulations.
To date, 860 regulatory actions have been withdrawn or removed from active status under Trump’s presidency. Under his watch, regulators have taken a smaller role and the government has taken a more hands-off approach to the housing industry.
After the added federal unemployment benefits under the first stimulus bill expired earlier this year, the House and Senate have been battling it out in order to pass another stimulus as COVID-19 continues to affect Americans.
The HEROES Act, currently on hold after being passed by the House, would bring much-needed relief to consumers, including mortgage and rent payment relief.
But a Trump re-election could hold the strongest chance for additional stimulus packages.
“At this stage, there is probably more chance of additional stimulus if Trump holds on to win a second term,” Ashworth said. “Equity futures have rallied as Trump’s odds have improved. But Trump would still face a House of Representatives controlled by the Democrats – and if the Republicans’ majority shrinks enough in the Senate, he’ll be left relying on Mitt Romney for support. Nevertheless, Trump could still pursue his protectionist and deregulation agendas via executive action.”
Ashworth said this is the case because, even if the Democrats can take control of the Senate, it will likely only be by one seat, leaving them at the mercy of the most moderate Democrats like Sen. Joe Manchin, D-WV., who are hostile to the Green New Deal and are more inclined to worry about balancing the budget or voting against tax hikes.