Yesterday we were part of history being made. Martin Luther King’s dream has finally become reality as the people of the United States elected senator Barrack Obama into the presidential seat.
All around the world, newspapers, blog posts and radio shows were talking about a new dawn, a renewed sense of belonging and humanity all thanks to this charismatic leader called Obama.
But it is early days yet and there is no doubt that Obama will have his plate full to the brim with concerns about the economy, the global credit crunch and the war against terrorism. The question is, how will Obama’s election affect the US property market?
While Chicago’s conservative businessmen are fearful of Obama’s new announced tax laws, Robert Byron, managing principal with Chicago’s Blue Vista Capital Partners LLC, says â€œI think that is misguided”. He further stated that property values in Hyde Park would go up since it is in Obama’s south side Chicago neighborhood.
It could well be that Chicago would indeed benefit from the fact that Barrack Obama hails from the very shores of the windy city. But what about the rest of the country? is there hope for the thousands of people who are losing their homes to foreclosures?
Are Obama’s intentions going to be enough to help these people turn their lives around for the better by asking banks for extended loans, or has the train left the platform already?
If we are to look at a recent survey by AMP Capital Investors, things don’t look so promising for investors with Obama’s victory. According to this survey, 54 per cent of investors believed an Obama victory would lead to a fall in share prices in November and December. As shares plummet, banks would be less willing to extend loans in order to protect their own investments. This could be disastrous for those home owners looking at foreclosures.
If this were to eventuate, the US commercial real estate sector would experience substantial losses.
On the other end of the spectrum, it seems that the property market in California is on the rise right now. Second hand home sales rose by 5.5 percent in the month of September which is 1.4 percent higher than the same month in 2007. This transcends into 5.18 million properties, opposed to 4.91 million in August.
New home figure sales have also shown promising results over the last few months and this trend is expected to spread to other states, such as Kansas, Colorado, Minnesota, Rhode Island and Missouri.
Judging by these examples, there is hope for a market upturn, but most likely it will be slow with many setbacks in the interim.