Election 2018 – What is the Impact on the Land Market? Week 3

Grid Lock:

The impact of a Democratic House of Representatives and a Republican Senate is probably government gridlock. Trump is not a typical politician, he is a businessman. It is the highest probability that the Democrats will continue their “Resist” posture in their pursuit of “power”. That means they will have missed an opportunity to find compromises that actually solve problems.

Therefore, I believe the greater impact on the land market will come from the ripple effects of The Fed (does it stop raising interest rates or keep raising them) versus the economic stimulus of the 2017 Tax Law. We will witness the resolution of an amazing interaction between those two gigantic forces.

If the PhD’s at The Fed have an epiphany and put interest rate increases on hold for 12-24 months, the 2017 Tax Act will prevail. If the PhD’s at The Fed keep raising interest rates in 2019, then The Fed will get to reduce interest rates in 2020 and 2021 to clean up their mess.

It appears to me that the economy in the first half of 2019 will be similar to the second half of 2018. The second half of 2019 is probably a recession. Beyond that is too fuzzy to predict.

Because land is the source of all wealth, a really good piece of land is the very best long-term asset one can hold in their portfolio.