For the nation’s 1.2 million Realtors, election day was about more than Donald Trump’s selection as our next president. The National Association of Realtors spent tens of millions to support local, state and federal candidates across the country and won over 90 percent of those races.
- The National Association of Realtors won more than 90 percent of the federal, state and local races it supported this election round.
- The trade group anticipates Trump's election will lead to less regulation at the federal level.
- NAR expects a "perfect storm" of legislation next year as Congress takes up bills having to do with tax reform, flood insurance, and reform of Fannie Mae and Freddie Mac.
The National Association of Realtors spent tens of millions to support local, state and federal candidates across the country and won over 90 percent of those races, according to Jerry Giovaniello, NAR’s senior vice president of government affairs and chief lobbyist.
“It was a great night for us,” he said in a live post-election webcast Wednesday from the trade group’s Washington, D.C., headquarters.
How the RPAC-backed races shook out
NAR, through its Realtor political action committee (RPAC), spent $25 million on congressional races this election round — the most in RPAC’s history, said NAR 2017 President Bill Brown in the webcast.
The trade group supported 426 U.S. House races and 32 U.S. Senate races with those funds — contributing to both Republicans and Democrats, he said.
This includes 47 “Opportunity Races” in which NAR put out calls to action through direct mail, phone banks and email for Realtors to become active in the campaigns of members of Congress who strongly support Realtor issues.
NAR also spent more than $17 million to support 412 “Realtor champions” at the state and local level — including nearly 100 candidates who are themselves Realtors — as well as 18 ballot measures in eight states, according to NAR 2016 President Tom Salomone.
The ballot measures opposed sales taxes on real estate services, rent control and property taxes and supported affordable housing and transportation measures, he said.
“With all that activity, it’s clear the Realtor Party uses every resource available to advance policies and candidates that promote homeownership and a vibrant business environment,” Brown said.
NAR refers to its political advocacy arm as the “Realtor Party” because it supports candidates based on how they stand on Realtor issues, regardless of political affiliation.
NAR core standards for associations require those associations to include a voluntary contribution for RPAC in their dues billing. Local associations can also make a corporate contribution in lieu of including the contribution in dues billing, among other workarounds, depending on state laws.
“In addition to the advocacy requirements already included in the original core standards, associations must support the ‘Vote-Act-Invest’ goals of NAR’s political advocacy program, the Realtor Party,” we wrote in a story about association core standards in May.
A NAR spokesman told Inman the trade group doesn’t get involved in presidential politics, including contributions.
That’s a “smart move” on NAR’s part because the amount of money spent on presidential elections dwarfs any one organization getting involved and really being effective, Giovaniello said.
‘Make your friends before you need them’
In a sense, Tuesday’s election didn’t change much for Realtors, Giovaniello said. The Republican Party controls the House and the Senate now and will control the House and Senate next year.
“More importantly for us is, our motto here has always been ‘Make your friends before you need them,’ so the people we’re going to deal with in this new Congress are old friends in many cases,” Giovaniello said.
“Many of the same committee chairpeople that we’ve been dealing with and telling them how important flood insurance is, tax reform issues, the reinvention of Fannie [Mae] and Freddie [Mac].
“They’ve already heard from us. So I think all in all, [it was a] good night.”
Even though Democrats won’t be controlling any of the branches of government next year, that doesn’t mean NAR will stop reaching out to them, according to Giovaniello.
“Our strength has been a bipartisan approach to legislation, to letters to the agencies. I think that’s still one of our strongest assets along with our grassroots,” he said.
“I think if we just did one party and relied on them, sooner or later you’re going to get sold out. Period.”
What effect will Trump have on real estate?
Trump has disparaged real estate agents and brokers, but he is also a licensed broker himself, though he is not a member of NAR. What will his presidency mean for real estate?
“All along we’ve said he obviously knows real estate and development,” Giovaniello said.
“The president working with the tax writing committee certainly will have input and opinions on his successes and shortcomings on some of the deals and I think that will be valuable input.
“I think that that’s the good part.”
On the other hand, Trump “highlights” the real estate industry, he said.
“This is an issue that both sides of Congress might feel, ‘Well, he knows the tax code best. He’s been using it successfully,’ so they might see that as an opportunity to move ahead very quickly.”
Whether Trump and Republican officials will support one of Realtors’ most important issues — the mortgage interest deduction, or MID — is up in the air, according to Giovaniello.
“The Republican platform did mention it, that it’s important, but they weren’t very specific, nor were Democrats,” he said.
“Essentially, we’re not exactly sure. While [Trump] has said at times he would support the mortgage interest deduction, it remains to be seen to what degree, what changes, and so on.”
Giovaniello also wasn’t sure whether Trump would have a chilling effect on foreign investment in the U.S., given his remarks about immigrants.
“I think that’s already being discussed on blogs and newspaper reports because he has very strong opinions on immigration and so on,” Giovaniello said.
“It’s a good question and something we have to be alert to.”
Giovaniello anticipated that there would be fewer regulations under Trump, especially in the areas of financial reform, environmental laws, Dodd-Frank rules and the Consumer Financial Protection Bureau (CFPB).
“So many regulations add to the cost of a home that it’s probably time to take a good look at that,” Giovaniello said.
The tax code can either incentivize the purchase of a home or make buying and renting about equal, he added.
NAR Political Consultant Doug Sosnik also expected less regulation at a federal level, but he predicted more regulation at the state and local level as progressive Democrats are disproportionately elected to govern cities.
Realtor issues still at risk
Even with one party at the helm, issues that Realtors care about — such as the MID, the property tax deduction, and the capital gains exemption — are still at risk, according to Giovaniello.
“Many think tank studies pointing out how you reform the tax code or ‘simplify’ it, these are all euphemisms for going after a lot of our incentives for homeownership and real estate investment,” he said.
“We have to be very vigilant as to what’s going to happen in 2017 because those are on the table, and we’ve already talked to some of the authors of these proposals. None are bills yet, but that’s what we have to watch for.”
The 1031 like-kind exchange is also in the crosshairs, according to the lobbyist. Such exchanges allow someone who sells a real estate investment property to defer paying taxes on the profit from the sale if that profit is reinvested into the purchase of a similar property.
“Both of the proposals on both sides [of the aisle] have been to limit them somehow,” Giovaniello said.
“The belief is if you limit them ‘oh, the same number of transactions will happen anyway.’ That’s just not the case and we have plenty of research to prove that.”
He anticipates a “perfect storm” of legislation will arise next year in which Congress considers bills having to do with tax reform, flood insurance and reform of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
In what is now essentially “a permanent campaign environment,” the first and most important thing NAR will have to do is identify its policy opportunities and vulnerabilities, Sosnik said.
“The second thing we need to do as soon as possible is engage our members as much as possible, directly with our elected officials, to either position ourselves to take advantage of these opportunities or prevent something bad from happening to our industry,” he said.
“There is no organization in the United States that has the capacity to be more impactful than Realtors,” he added.
“Realtors are in every community. It’s going to be essential that we engage our Realtors as much as possible with our local officials in a permanent campaign style.”