From state and local budget impasses and halted infrastructure repairs to the debate and delay on healthcare reform, political polarization has far-reaching effects on the economy and nearly every community — as well as its real estate. Global uncertainty has a parallel paralytic effect, from Brexit to immigration bans, which bring new challenges to diplomacy, international trade and new household formations. Those two issues top the list for 2017–2018 from The Counselors of Real Estate®, a professional association, in its recently released annual Top Ten Issues Affecting Real Estate.
The healthcare industry is a network of public and private entities — a partnership that is on shaky ground when leaders cannot agree on coverage, rates and locations where plans will be available. A major provider is requesting a 23-percent premium rate increase for 2018, citing a lack of government funding for cost-sharing reduction payments — noting its increase would most likely have been about 9 percent if it were assured of payments. The uncertain environment also affects decisions concerning provider payments and the physical locations where services are delivered.
State-run lotteries may also suffer from political polarization if it leads to budget crises. Without confirmed funding, there would be no appropriation to pay the issuing agency nor authorization to make payouts to local winners. Not only would those states lose a much-needed revenue stream, but owners of such retail locations as convenience stores and gas stations — which sell the tickets — may well see declines in merchandise sales from customers who would normally drop by to buy lottery tickets.
“Political polarization and global uncertainty are the top disruptors that dominate the news headlines today and, therefore, have a significant impact on real property,” says Scott Muldavin, 2017 chair of The Counselors of Real Estate. “Polarization leads to bad short-term decision making, which you can see almost constantly in policies, and ongoing dialogue on issues as wide-ranging as healthcare, infrastructure and tax reform. Immigrants are also a prime source of new household formation, so uncertainty about immigrant entry and their status has a real effect on rental property and home purchases.”
Investment in real estate, much-needed infrastructure repairs and improvements also suffer from the polarization and uncertainty. Some public transit development has been deferred. Cross-border trade confusion — which impacts transportation, warehousing, and even port logistics — are also hampering retail goods delivery. Uncertainty (or revelations) about public sentiment can even affect an individual’s decision to move or not to move to a new community or neighborhood as well as corporate and small-business decisions to locate or relocate in a particular state or city.
The CRE® Top Ten Issues Affecting Real Estate 2017–18
- Political Polarization and Global Uncertainty
- The Technology Boom
- Generational Disruption
- Retail Disruption
- Infrastructure Investment
- Housing: The Big Mismatch
- Lost Decades of the Middle Class
- Real Estate’s Emerging Role in Health Care
- Climate Change
The Counselors of Real Estate®, established in 1953, is an international group of high-profile professionals that include members of prominent real estate, financial, legal and accounting firms as well as leaders of government and academia who provide expert, objective advice on complex real property situations and land-related matters. CRE does not take positions on issues or engage in advocacy, which ensures its objectivity.