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Election 2024: What Home Builders Need to Know and How to Prepare

How Home Builders Can Prosper Post-Election

Author

Timothy Dahl
October 31, 2024

As the 2024 presidential election approaches, the potential impact on the home building industry is significant. While we remain neutral on political matters, it's crucial to analyze how the policies of either candidate could influence your business operations, marketing budgets, and strategic planning. 

This weeks newsletter aims to provide you with evidence-based insights to help you navigate the post-election landscape confidently. We're here to turn the political chatter into solid strategies that keep your projects—and profits—soaring.

1. Analyzing Potential Policy Changes

Regulatory Environment

Under Kamala Harris:

  • Environmental Regulations: A Harris administration may prioritize environmental sustainability, potentially introducing stricter building codes and regulations aimed at reducing carbon emissions. According to the National Association of Home Builders (NAHB), increased regulations can add up to 25% to the cost of a new home1.

  • Impact: While this could increase construction costs due to the need for eco-friendly materials and practices, it also opens opportunities in green building markets, which are projected to grow by 8.6% annually2.

Under Donald Trump:

  • Deregulation Efforts: A Trump administration is likely to continue efforts to reduce regulations in the construction industry. The U.S. Chamber of Commerce notes that deregulation can lower compliance costs and expedite project timelines3.

  • Impact: Reduced regulatory burdens may decrease overhead costs and increase profitability but could also lead to increased competition as barriers to entry are lowered.

Tax Implications

Corporate Taxes:

  • Harris Administration: Potential increases in corporate taxes could affect net profits. The Tax Foundation estimates that proposed tax plans could raise the corporate tax rate to 28%4.

  • Trump Administration: Continuation of the 2017 Tax Cuts and Jobs Act could maintain lower tax rates, preserving current profit margins.

Impact on Home Builders:

  • Adjusting financial strategies to account for changes in tax obligations will be essential. Consider consulting with tax professionals to optimize your tax positions under either scenario.

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2. Economic Forecasts and Market Conditions

Interest Rates and Mortgage Costs

  • Federal Reserve Independence: While the Federal Reserve operates independently, fiscal policies can indirectly influence interest rates.

  • Market Expectations: According to Freddie Mac, mortgage rates are expected to remain relatively low, but policy changes could introduce volatility5.

  • Impact: Low interest rates generally boost housing demand, benefiting home builders. However, sudden rate increases could dampen buyer enthusiasm. If the economy remains on track, sudden rate increases are unlikely and the Fed has targeted more rate cuts in 2025.

Consumer Confidence

  • Economic Stability: Elections can affect consumer sentiment. The Conference Board reports that consumer confidence indices often fluctuate during election years6.

  • Impact: High consumer confidence encourages home buying, while uncertainty may lead to postponement of purchasing decisions.

3. Impact on Labor and Materials

Labor Force Dynamics

Immigration Policies:

  • Harris Administration: Potentially more open immigration policies could ease labor shortages.

  • Trump Administration: Continued strict immigration controls may exacerbate labor shortages. The NAHB indicates that 77% of builders are already facing labor shortages7.

Impact: Labor availability directly affects project timelines and costs. Proactive recruitment and training programs may mitigate labor challenges.

Material Costs

Trade Policies:

  • Tariffs and Trade Agreements: Changes in trade policies can impact the cost of imported construction materials.

  • Impact: Fluctuations in material costs affect budgeting and pricing strategies. Dodge Data & Analytics notes that tariffs previously increased construction material costs by up to 9%8.

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What This Means for Home Builders

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4. Adjusting Marketing Strategies Post-Election

Budget Planning

  • Flexibility is Key: Allocate marketing budgets that can adapt to economic changes. According to Gartner, companies that maintain marketing spend during downturns recover faster9.

  • Diversify Channels: Invest in digital marketing and content marketing to reach clients cost-effectively. Send us an email, we can help.

Messaging and Positioning

  • Build Trust: Emphasize stability and reliability in your messaging to reassure clients during uncertain times.

  • Highlight Value: Focus on the long-term benefits of homeownership and quality construction.

5. Actionable Steps for Home Builders

Risk Management

  • Scenario Planning: Develop business strategies for multiple election outcomes. PwC recommends stress-testing financial models against different policy scenarios10.

  • Supply Chain Assessment: Secure supply chains by identifying alternative suppliers to mitigate risks from trade disruptions.

Networking and Advocacy

  • Industry Engagement: Join associations like the NAHB to stay informed and have a voice in policy discussions.

  • Community Outreach: Engage with local governments and communities to understand regional impacts.

Takeaways

The 2024 election presents both challenges and opportunities for home builders. By staying informed and preparing strategically, you can navigate the post-election environment effectively.

Regardless of the election outcome, home builders should focus on efficiency and adaptability. Those who can quickly adjust to policy changes will have a competitive advantage.

To better building!

Timothy

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  • Implement Strategies: Use these insights to adapt your business and marketing plans proactively.

Footnotes

About Builder Playbook

Builder Playbook is your trusted resource for industry insights, market trends, and strategic advice tailored for home builders. Our mission is to empower you with the knowledge you need to build successful and sustainable businesses.

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Disclaimer: The information provided in this newsletter is for general informational purposes only and should not be construed as financial, tax, or legal advice. While we strive for accuracy, we recommend consulting with professional advisors for guidance specific to your situation.

Footnotes

  1. National Association of Home Builders. (2021). Regulation: Over 30 Percent of the Cost of a Single-Family Home. ↩

  2. Zion Market Research. (2020). Green Building Materials Market by Product and Application. ↩

  3. U.S. Chamber of Commerce. (2019). The Regulatory Impact on Small Business. ↩

  4. Tax Foundation. (2024). Analysis of Corporate Tax Proposals. ↩

  5. Freddie Mac. (2024). Mortgage Market Survey. ↩

  6. The Conference Board. (2024). Consumer Confidence Survey. ↩

  7. National Association of Home Builders. (2023). Labor Shortages in the Construction Industry. ↩

  8. Dodge Data & Analytics. (2020). Impact of Tariffs on Construction Costs. ↩

  9. Gartner. (2020). Marketing Budget Allocation Report. ↩

  10. PwC. (2021). Strategic Planning for Uncertain Times. ↩