Real Estate Developers Vs The 2024 Elections
Real estate developers may see changes as the 2024 presidential election gets closer. Which might have an impact on the direction of the real estate industry. Real estate decisions are significantly impacted by political results. Whether they are related to legislation, market dynamics, or wider economic trends. As a company dedicated to helping developers visualize and sell their projects before they break ground. Outer Realm understands how external factors, like political shifts, can influence strategies and outcomes. We’ll discuss important topics that developers should keep an eye on throughout this election cycle in this post. Along with strategies for being ready for any outcome in the election.
What Could Change?
A major consideration for developers in an election year is the possibility of a change in governmental direction. Changes in zoning rules, environmental policies, and tax laws can have a significant impact on real estate. The performance of a new administration’s goals for housing or sustainability may have a long-lasting effect on development plans.
Tax Reform and Incentives
Tax policy is a central topic in any election, with implications for developers that range from investment viability to construction costs. Several candidates are proposing different approaches to capital gains tax, corporate tax rates, and property tax deductions.
For instance, if capital gains taxes rise, real estate investors may find less appeal in long-term property investments, particularly in the commercial sector. On the other hand, tax breaks for investments, such as the ability to deduct costs associated with environmentally friendly construction, may encourage developers to choose more sustainable methods. Which can slow down any project to be finished on time.
A relevant data point: a study from the Urban-Brookings Tax Policy Center indicated that changes in capital gains tax rates could directly affect real estate investments by as much as 20% depending on the policy shift. This underscores the need for developers to stay informed about which candidates might support or oppose tax incentives for property development .
Interest Rates and Market Demand
The election will also affect interest rates, inflation, and investment levels, all of which have an immediate influence on the real estate market. These impacts will be felt throughout the whole economy.
Interest rates, which impact mortgage rates and specify the cost of borrowing, are among the most important factors for real estate developers. The Federal Reserve may change interest rates in reaction to the economic policies of the incoming government. Which may be contingent on the outcome of the election. When financing becomes more affordable due to lower interest rates, there is typically a greater demand for both residential and commercial real estate.
According to the Federal Reserve’s Beige Book, during previous election cycles, market uncertainty led to temporary interest rate fluctuations. Developers should prepare for the possibility of short-term market volatility before and after the election, which could impact large-scale project financing.
Investment Levels and Market Growth
The election will also affect the level of domestic and foreign investment in real estate. An administration that encourages private investment, with policies such as business tax cuts and incentives. This may result in a surge of investment in commercial properties and luxury developments. However, a candidate favoring higher corporate taxes or stricter environmental regulations might prompt investors to pause new developments until the policy landscape stabilizes.
A report by Deloitte on real estate outlooks shows that election-year uncertainty can temporarily suppress investment activity. With some investors waiting to see the regulatory direction before committing to new projects . However, history also shows that following periods of uncertainty, the market often rebounds quickly, presenting opportunities for those developers who stay agile.
A Growing Focus
Candidates from all political stripes are beginning to prioritize sustainability. Regardless of the outcome, developers should expect to see an increase in the number of legislation supporting sustainability, green buildings, and energy efficiency.
Outer Realm specializes in helping developers showcase real estate projects through virtual reality tours, offering services that deliver precise and detailed visualizations. Candidates advocating for stricter environmental laws may propose more expensive and time-consuming projects. By requiring stricter energy efficiency guidelines, construction material laws, or land use limitations. However, these expenses may be covered by government incentives for sustainable development, increasing the financial appeal of environmentally friendly initiatives.
Affordable Housing Initiatives
Another area where legislative changes could take place is affordable housing. Prospective lawmakers who place a high priority on affordable housing could propose laws that encourage the construction of affordable housing by developers. These efforts might take the form of subsidies, tax breaks, or adjustments to land use regulations. These rules may present new chances for projects that are in line with government-sponsored efforts for developers operating in metropolitan areas where there is a shortage of housing.
Developers must understand, though, that these activities may have an impact on the value of the property. Policies that give priority to luxury or commercial constructions over affordable housing may cause the balance of demand to change, changing the value of real estate in particular neighborhoods.
Navigating Uncertainty in the 2024 Election
For real estate developers, the 2024 Presidential Election introduces a period of uncertainty, but also potential opportunity. By staying informed about policy changes in tax reform, interest rates, and sustainability initiatives, developers can position themselves to adapt to new market conditions.
No matter the outcome, Outer Realm remains committed to supporting developers in visualizing their projects through these changing times. Providing cutting-edge 3D rendering and virtual reality tours to help developers secure pre-sales and maintain investor confidence. As the political landscape evolves, we will continue to help our clients navigate this journey. Ensuring that their projects remain competitive and forward-looking.