It’s that time of year again… A big election is on the horizon, no matter who wins there will be a new President come January, and control of the House and Senate could shift. There is a lot of change no matter what. The outcome of the upcoming election cycle will play a crucial role in shaping future environmental policies, infrastructure investments, and other legislation that could significantly impact multifamily housing and commercial real estate.
Limited Market Impact
Historically, individual elections have had a minimal effect on multifamily housing and markets. While elections can stir up temporary volatility due to the uncertainty they introduce, this instability typically subsides once the results are known. The direction of the markets is then more influenced by broader economic factors and investor sentiment rather than the election outcome itself. In essence, the markets might rally simply because the uncertainty is behind us, not because of who wins.
Instability is a challenge for investors, but the post-election period often brings greater clarity on the path forward. In certain situations, the market might react to the presidential race, particularly if one candidate emerges as a clear frontrunner in the polls. This can lead investors, consumers, and businesses to adjust their expectations and investment strategies accordingly.
Interest Rates and Election-Year Optics
As election day nears, multifamily investors might be particularly focused on interest rates and inflation. However, it’s important to note that the Federal Reserve’s decisions are based solely on economic data, not political considerations. The Fed’s independence in managing monetary policy is critical, and it remains committed to adjusting policy rates based on evidence that inflation is sustainably moving toward its long-term target of 2%. This independence helps the Fed avoid any perception of partisanship.
The last Federal Open Market Committee (FOMC) meeting before the election is scheduled for September 18. Given its proximity to the election and the release of recent economic projections, this meeting will likely draw significant attention. Nevertheless, rates could remain volatile even after September 18, as the anticipated election outcome might influence the future trajectory of inflation.
Potential Stability in Housing Regulation
Increased funding for multifamily housing remains a possibility, but it largely hinges on Congress. Regardless of who becomes the next president, it is unlikely that housing funding and policies will be rolled back. There’s a growing bipartisan frustration with the cost of housing, which means that while both parties may approach the issue differently, the overall commitment to affordable housing is expected to persist.
If either party secures control over the House of Representatives, Senate, and White House, there could be significant shifts in housing policies. However, with a divided government, federal housing policies are likely to remain stable, with political polarization in Congress playing a more significant role in shaping commercial real estate policymaking than the presidential election itself.
Election and Economic Influence on Infrastructure Spending
Federal investment in infrastructure, such as roads, bridges, power grids, and housing, is expected to continue under the Infrastructure and Jobs Act, regardless of the election outcome. The role of Congress will be key here. If the government remains divided, infrastructure spending will likely stay fairly stable. However, if one party sweeps the elections, there could be either greater expansion or cuts in spending.
Infrastructure spending often ramps up during economic downturns as a response to rising unemployment. Depending on the economic landscape, either administration might choose to increase infrastructure funding, which could benefit commercial real estate. For example, modular construction, with its factory-like approach, significantly reduces costs, although the high expense of transporting modular housing remains a challenge.
The continuation of infrastructure investment is likely to depend more on overall macroeconomic health and the need for either deficit reduction or economic stimulus, particularly in a struggling labor market.
Real Estate and Strategic Supply Chain Spending
Infrastructure legislation related to national security and supply chains is especially sensitive to geopolitical developments. This area is likely to be prioritized across different administrations and congressional outcomes. Both potential administrations are expected to maintain a tough stance on trade with China, with homeshoring and nearshoring efforts likely to continue, regardless of election results. These strategies can help commercial real estate and multifamily sectors by reducing development timelines and costs.
Over the past eight years, the conventional wisdom around free-trade agreements has largely faded, with supply chain decisions increasingly seen as part of broader strategic relationships that combine domestic protectionism of key industries with national security. Both potential administrations are expected to continue this approach, which could have various impacts on global supply chains, including the prioritization of domestic investment, the implementation of trade tariffs, and the renegotiation of trading relationships.
