How Do Politics Affect Real Estate Law?

Politics affects nearly every industry, including real estate. Since owning land represents a significant percentage of individual wealth, there is a deep interest in protecting this wealth from taxes and other factors that cut into capital gains. Here are areas of concern for property owners about real estate law.

Interest Among Families and Investors
Most American families, about 65 percent, own their homes, according to a recent Federal Reserve study. Due to enormous profit potential, real estate is beautiful to investors. The factors that affect home valuations include demographics, interest rates, the overall economy, and government policies. These policies include government subsidies to boost affordable housing or demand for new housing. Various government incentives can potentially add stimulus to home buying.

Demographic Trends in Real Estate
Over the past several decades, the youth market has rallied around progressive causes, while older generations have embraced the establishment. The baby boomers, who were born in the post-war era from the mid-forties through the mid-sixties, represent a large block of the population. Although the kids of this era were vocal about social change, they inevitably became many of today’s homeowners who have embraced traditional family and community values. Boomers are now headed for retirement, which encompasses more political issues, including pensions, Social Security, and taxes yet.

Boomers began to retire in 2010, and throughout this century, the Estate Tax issue has surfaced frequently, which affects property heirs. These issues play a huge role in the affordability of larger homes for heirs and investors.

Effects of Interest Rates
Interest rates have had a profound effect on the real estate market. The flipping of subprime mortgage loans by brokers prior to the housing crash of the 2007-2008 era led to new laws affecting the mortgage industry. Mortgage rates are affected by interest rates to banks set by the Federal Reserve, in which the chairman is appointed by the U.S. President.

These rates also affect the government-sponsored enterprises Fannie Mae and Freddie Mac, which purchase mortgages to help increase loans in the secondary lending market. They mainly exist to make homes more affordable to lower and middle-class families.

Following the market crash of 2008, the federal government passed a first-time homebuyer’s tax credit for homeowners to help stimulate home sales. The National Association of Realtors (NAR) has confirmed that this credit alone helped facilitate the sale of 900,000 homes.

About Getler, Gomes & Sutton PC
Getler, Gomes & Sutton PC is a real estate and construction law firm in New York. The firm also specializes in high-rise developments in New York City, and was created by its Principal, Janine Getler in 2009. Follow Getler, Gomes & Sutton PC on Twitter to learn more.