The future presidency/vice-presidency of Joe Biden and Kamala Harris has some specific implications for the 2021 Colorado Springs housing market. Here’s what I know about what 2021 could look like for the housing market in Colorado Springs:
Here are my thoughts on these proposals from Joe Biden:
I think the teacher incentive is similar to the teacher job incentives that our government was/is doing. That seems to be the most feasible thing to happen. The up to 15k tax credit worries me from a financial standpoint, though it is certainly inspiring. Things cost money, so we need to know how something like this gets paid for.
The third point about the appraisal process is most confusing to me. Joe Biden seems to also be confused, because he’s wanting to create a national standard for the appraisal process, when one already exists: the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisers are regularly checked on their work by other review appraisers, and lenders/clients are free to, and often do, request revisions and/or clarifications to appraisal reports. I’m not sure if Joe Biden thinks that the appraisal industry is a kind of no man’s land, but if he does, he is mistaken.
An appraiser does not give an opinion of value on a property based on the racial demographics of a neighborhood or market, but upon similar homes in the same neighborhood, if possible (and it’s usually possible). If an appraiser goofs it, there are strict regulations to correct that. Sure, nothing’s perfect, but I’m not sure there is any “racial” flaw in the appraisal process to correct. Individuals, absolutely, but not the standard itself. The historical racial housing laws and the blockbusting and redlining, absolutely those are problems that are even today still affecting people of color, and especially with Black Americans.
I don’t mind him looking into it, but I highly doubt Joe will find anything under the appraisal rock to complain about, and we’ll move on to other source problems (like our own government laws), where he and Kamala can actually effect change.
Ultimately, the price of a property is determined by the market, which is to say, the buyers. You can appraise a property and say what you think it’s worth, or “should” be worth, but at the end of the day, that’s irrelevant because all that matters is what someone is willing to pay for the house. If you get an appraisal on a house and it comes in low, and a second appraiser gives it a higher value, that doesn’t necessarily imply anything malevolent on the part of the first appraiser. I mean, it could, but this feels to me like someone, I don’t know who, is pointing a finger at appraisals, as if they’ve been the source of the racist people all along. Sure, I’m sure we can find a few bad apples in there, but you’re missing the forest for the trees. The racism is rooted in various state and federal laws, but the location of a property, even if it’s across the street, can affect the home’s value in a big way, regardless of the racial makeup of a neighborhood. Or is it because of it? Could there be inherent racism in the simple average home values per different neighborhoods? Certainly. In Colorado Springs? I don’t know. Can we prove that the average home price in one neighborhood is less than another neighborhood specifically because of an attributable racist law?
If Joe Biden can do that, I’m all ears. No, seriously. If that’s what he wants to address specifically in the appraisal standard procedure, then that’s a much bigger topic to tackle, and not one that will get solved quickly. That’s one I’d be interested in seeing a plan for.
Biden also mentions increasing the amount of people who could qualify for lower rate mortgages could increase with the establishment of a new public credit agency that would be looking at additional considerations such as a history of bills that have been paid on time, like utility bills and rent. This could raise the credit scores for many buyer who previously would not have qualified for a mortgage loan.
Biden also wants to examine any and all regulations that promote segregation, or that would create additional barriers for home builders to build more housing. What I’m hearing from this is a change to zoning laws, though there could be more to it.
Joe Biden also has said that he plans to fully fund Section 8 vouchers, promising assistance for everyone who qualifies for the program. According to Realtor.com, about a quarter of eligible Americans for Section 8 vouchers never receive anything because of the lack of full funding.
There are also other mentions, like a tax credit for low-income renters, so that they never pay more than 30% of their income toward rent and utilities. There’s also the question of the eviction moratorium that we still have in place, which prevents landlords from evicting tenants due to COVID-19. Will Biden extend the moratorium?
Biden also wants to use $100 Billion of taxpayer dollars for housing construction and potential upgrades to affordable housing. This would also include tax incentives for homebuilder construction companies, and getting rid of more restrictions and regulations for construction companies as well as local and state governments. There is also talk of emergency funds for shelters and services for the homeless, as well as denying federal funds for any shelters that discriminate based on sexual orientation or sexual identity.
Then Biden wants to make more housing available for the elderly, disabled, and felons/formerly incarcerated. Not sure what this may look like in practice.
And finally, Biden has mentioned doing away with 1031 exchanges, which would force capital gains tax for investors, and in particular would affect fix and flip investors and anyone who invests in real estate.
There is a lot up in the air, and no one has answers to a lot of things right now. That’s OK! We are in a state of change, and change is going to come whether we like it or not. We are still in trying times, and it still seems like the COVID-19 news will be never ending. We have certainly come a long way, but we also have some more work and time to go through before things can go back to normal.
2021 will be exciting and full of hope. Thanks to our first responders, pharmaceutical companies and biotechnology companies, we have come a long way in minimizing the damage this virus has caused.
Please post a comment if you have further ideas on Biden’s plans for the country!
Also, if you are looking for a worthy non-profit organization to donate to, America’s Fallen Heroes is one that I support. They raise money for the families of all fallen first responders including military, police, firefighters, EMS, and first responders.