Issue 101 – Election Madness: Navigating the Real Estate Ripple Effect

Election years always bring a degree of chaos, and the impact on the real estate market is no exception. As we approach Election Day, the effect on housing and mortgage rates is becoming evident. This phenomenon stems from three main factors: uncertainty, policy expectations, and consumer confidence.

Uncertainty about election outcomes can cause buyers and sellers to either delay or rush decisions. Policy expectations related to housing regulations, taxes, and subsidies also influence market behavior. Lastly, consumer confidence impacts the market, as people may postpone major purchases until they feel more secure about the country’s direction.

Both candidates are focused on housing. Initially, Trump and Biden proposed policies that could significantly affect the real estate market. Kamala Harris, now the official Democratic Party candidate, recently announced a proposed $25,000 subsidy for first-time homebuyers and a commitment to creating three million new homes.

According to a recent article in The Real Deal, Harris posted her vision on X: “Every American deserves affordable housing — yet the cost is too high in communities across our nation. That is why our Administration just took another step to lower costs by announcing actions to limit rent increases and build more affordable homes.”

Democrats generally support measures like rent caps and increased housing construction, which have met resistance from landlord groups.

Trump, who is familiar with the industry, aims to extend policies from his 2017 tax law, which expires in 2025, and provide additional tax incentives to promote homeownership. Trump wants to increase the standard deduction while the SALT (State and Local Tax) deduction.  Currently, SALT allows taxpayers who itemize to deduct up to $10,000 of property, sales, or income taxes already paid to state and local governments; initially, the SALT deduction was unlimited. In theory, the deduction exists to offset some federal taxpayer liability by excluding income already taken in taxes for state and local government services. The $10,000 SALT cap hit high-cost, high-tax blue states such as New York and New Jersey the hardest — a key concern for those in New York City.

Historically, President Biden planned to reverse parts of this law and increase corporate taxes. Should she win the election, Harris is expected to follow suit.

Referencing the same article by TRD, “Biden wanted to restrict the 1031 tax exchange program, which allows investors to defer taxes by rolling their capital gains on recent property sales into new properties. Most recently, Biden pitched limiting the deferral of such gains to $500,000 for each taxpayer.” While we cannot predict if Harris would mimic Biden’s exact policies, it is safe to say she will err on the side of his policies as opposed to Trump’s.

Conversely, Trump’s agenda includes lowering mortgage rates by reducing inflation, though this is primarily controlled by the Federal Reserve, which sets target interest rates for the financial system. Additionally, Trump seeks to limit foreign investment in U.S. real estate, especially from China, and promote luxury developments.

An article by Bankrate indicates that housing prices rise in election years at a higher rate than non-election years. However, it’s nuanced. Even though election years may feel more volatile, Lisa Sturtevant, chief economist at Bright MLS, a large listing service, says, “Historically the housing market doesn’t tend to look very different in presidential election year compared to other years.” She goes on to say that it comes down to demographics and the economy.

In particular, unemployment and interest rates are more important than what is happening on the national political scene.

Given that average mortgage rates are more than double what they were in 2020 and 2021, and home prices remain sky-high, housing activity remains stagnant, with existing home sales at their lowest since 2020.

Conversely, purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains.

Whether the Democrats or the Republicans win, the outcome is likely to impact the real estate market because there’s going to be a backlash to whoever is in power.

Ultimately, the election outcome may influence real estate, with reactions varying depending on which party wins. While election years bring volatility, the turbulence is temporary. Renters, buyers, and sellers may wait for the election results before making significant moves, knowing that prices and rates could fluctuate during this period.

It’s always worth remembering that past performance should not be taken as a guide to future performance. The value of investments and the income from them can go down as well as up, and you may not get back what you put in. You should continue to hold cash for your short-term needs.

Let’s face it, a drop in mortgage rates — with the possibility of a continued reduction in the Fed’s interest rates — will be the driving force for many who are priced out by the current numbers. Is that going to be enough to create an uptick? It’s still to be seen, but the ability for people to seize an opportunity becomes much more palpable, and in the end, real estate may become one of the most effective vehicles for diversification in a volatile climate.

Issue 127 – The Price Isn’t the Price

A new calculation is changing what a New York apartment is actually worth. For decades, NYC real estate has been obsessed with price per square foot. However, now we may be entering the era of cost per year.

Consider two apartments of the same size, price, amenities, light, view, and location. If one has $6,000 in carrying costs and the other $11,000, are they really worth the same amount?

Increasingly, I would argue they are not because buyers aren’t simply purchasing apartments anymore. They are purchasing the economics of the buildings they’re in, which are starting to matter enormously. Think: insurance, labor, utilities, repairs, taxes, assessments, energy compliance, staffing, capital improvements, and reserves. While monumentally important, none of these photograph well, but all determine whether an apartment is easy to own — and eventually sell.

We have always understood that certain characteristics affect value: a lower floor trades differently from a higher one, an awkward layout matters, a protected view commands a premium, and poor light equals a discount. However, I contend another discount is related to the aforementioned carrying costs.

The sexiest amenity in New York real estate may soon be a healthy balance sheet. That sounds less exciting than a lap pool, unless you are the one writing the checks. Operating costs in New York have been rising, putting pressure on building budgets and making previously deferred capital projects harder to ignore.

The 2026 New York City Price Index of Operating Costs — which tracks expenses for the city’s rent-stabilized building stock — illustrates the broader pressure. Over the five years through 2026, insurance costs in that index increased more than 80%. Maintenance increased 29%, utilities more than 26%, administrative costs more than 21%, and labor nearly 16%.

Those figures aren’t a direct proxy for every condominium or cooperative in Manhattan. But they illustrate something anyone involved in operating New York buildings already understands: buildings are getting more expensive to run.

One mistake buyers can make is falling in love with the apartment and treating the building as secondary. In New York, you aren’t just buying four walls; you’re buying into a small economy. You’re inheriting its management decisions, staffing structure, physical plant, reserve philosophy, insurance exposure, and capital planning.

A building that deferred maintenance may appear inexpensive today because it hasn’t yet charged owners for the work it needs. That doesn’t necessarily make it inexpensive. It may mean the bill hasn’t arrived yet. Conversely, a building that recently completed an expensive façade project, replaced major mechanical systems, or invested in energy efficiency may initially appear less attractive because owners have already absorbed those costs. We need to consider which building presents the greater risk over the next decade. The answer isn’t always obvious from the monthly maintenance number.

Buyers understandably love low carrying costs, and brokers value them because they make a property easy to market. But low monthly charges deserve as much scrutiny as high ones. A good broker asks: Why are they low? Is the building extraordinarily well managed? Does it have other income? Are the reserves substantial? Or has the board resisted increasing common charges while postponing expensive work?

An important distinction exists between efficient and underfunded. A well-run building with appropriately funded reserves may ultimately be far more economical than one with artificially low monthly charges followed by recurring assessments. It’s not just the number that is meaningful, but the story behind it.

Few words cause more anxiety in a New York transaction than “assessment.” Even here, context matters because not every assessment is a red flag. An assessment financing a necessary capital improvement can actually strengthen the building. A new roof, elevators, façade work, upgraded mechanical systems, or energy improvements may protect long-term value.

The more important questions a sales pro considers are: What is the assessment for? Why didn’t reserves cover the expense? Is it part of a thoughtful capital plan or the latest in a recurring series of emergencies? And, perhaps most importantly, what comes next? A $500 monthly assessment with a clear end date concerns me considerably less than a building with no assessment, minimal reserves, and several million dollars of foreseeable work.

New York’s environmental requirements add another layer of complexity. Local Law 97 places emissions limits on many large buildings and creates increasingly stringent requirements over time. The encouraging news is that the overwhelming majority of covered privately-owned buildings are currently meeting the applicable limits.

But buyers should still understand what their particular building is facing; Has the Board commissioned the appropriate studies? What capital improvements may eventually be required? Has money been allocated? Is compliance incorporated into long-term planning? The concern isn’t whether a building faces a penalty today; it’s whether the building has a credible plan for tomorrow. That, increasingly, is part of due diligence.

New development creates its own version of this problem. Buyers are understandably attracted to pristine buildings with spectacular amenities and, sometimes, surprisingly reasonable initial common charges, but what will the building actually cost to operate when it is fully functioning?

Pools, spas, private dining rooms, screening rooms, landscaped terraces, playrooms, fitness centers, and mechanical systems all require staff, maintenance, and money long after the sales office closes.

The glossy brochure tells you what you’re getting. The budget tells you what you’re buying — both matter.

This conversation also requires nuance when comparing co-ops and condos. A co-op’s maintenance can initially look dramatically higher because it often incorporates expenses that a condo owner pays separately, including the shareholder’s proportionate share of the building’s real estate taxes. A condo may show a lower common-charge number while property taxes sit alongside it.

So, comparing maintenance to common charges without understanding what each includes is meaningless. The correct question isn’t: Which monthly number is lower? It is: What is my total cost of ownership, and what am I receiving in return? I believe strong building economics will increasingly become an amenity in their own right.

Brokers spend an immense amount of time learning how to talk about marble, appliances, ceiling heights, views, and finishes. We should be equally capable of explaining the financial health of the building we’re selling, because that is a big part of valuation.

None of this means price per square foot is irrelevant. It’s still an important metric. But like any metric, it becomes dangerous when used without context.

I’ve spent my career watching New York buyers pay premiums for things that cannot easily be replicated, including light, views, ceiling height, architecture, location, outdoor space, great proportions. But I always add another thing to the list: financial soundness. That may not command the same emotional response when someone walks through the front door. But increasingly, it may command something just as valuable – confidence, which matters in uncertain markets.

For years, we’ve asked buyers how much apartment they can afford. Now we need to start asking them how much building they can afford.  Because in New York, you don’t just buy the apartment — you inherit the economics beneath it.

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