How the 2024 Election Could Change Real Estate Markets
As the U.S. prepares for the 2024 presidential election, the potential impact on the real estate capital markets is becoming a significant discussion point. Historically, presidential elections introduce periods of uncertainty, which can temporarily affect real estate investments.
However, the outcome often shapes policies—such as taxes, housing regulations, and infrastructure spending—that can have lasting implications for the commercial real estate (CRE) sector. One key area of focus is tax policy. The candidates have diverging views on extending the 2017 tax cuts, which include provisions directly affecting real estate investors. A Republican-led administration may look to make these cuts permanent, incentivizing property investments through lower taxes on capital gains and real estate transactions. On the other hand, a Democratic-led administration could push for higher taxes on corporations and wealthy individuals, potentially reducing some incentives for real estate development. The future of 1031 exchanges, a popular tax-deferral tool for property sales, also hangs in the balance, with Democrats signaling possible reforms or repeals to boost revenue, which could slow real estate transaction volumes.
In terms of regulations, the election could affect housing affordability and zoning laws. For instance, Democrats are more likely to pursue rent control measures and increase funding for affordable housing, while Republicans may focus on boosting homeownership through incentives and easing restrictions on development. Both parties have shown interest in infrastructure development, with implications for real estate tied to transportation hubs and logistics.
Importantly, while elections generate uncertainty, markets tend to stabilize post-election as policies become clearer. Experts recommend a disciplined investment approach, focusing on fundamentals like asset class performance and local market trends rather than reacting to political shifts.
For a more in-depth look at these dynamics, check out insights from JPMorgan Chase and Real Deal, or read the full report on SIOR.
