Maine Insider Newsletter

November - December 2024

The election is over FINALLY! Gosh, if I never get another political text again, it’s already 3000 too many!

This month I am going to take a look forward at some potential outcomes of the “red wave” on real estate, so make sure you check out the “Market Insider”

Also, we will give a little preview of next month’s “Maine Arts, Culture and Cuisine”  issue with some personal Nutcracker photos of yours truly 🙈

This year is flying by, let me know what you think is coming before the start of 2025!

With Love, 

Michael Hamilton

📸 The Maine Shot

A Photo of Michael Hamilton preforming in the Nutcracker

Things to do:

November & december

• Nutcracker Ballet - Nov 29 - Dec 8 - Merrill Hall Auditorium w/Home Sweet Maine’s Michael Hamilton

• Gardens Aglow - Nov 16 - Dec 31 - Maine Botanical Gardens, Boothbay, ME

• Christmas on Main - Dec 6 - Brunswick, ME
• Holiday Mansion Tour - Nov 30 & Dec 1 - Auburn, ME

The "Red Wave"

and What It Could Mean for Maine Real Estate

With the recent political shift, let's examine a few of Trump's campaign promises and consider how they might impact the real estate market—especially focusing on:

• Interest Rates

• Inflation

• Real Estate Inventory

Interest Rates

Mortgage rates are closely tied, though not identical, to Federal Reserve rates. While the Fed operates independently of the White House and Congress, government actions can indirectly influence the factors that drive the Fed’s rate decisions, including:

• Unemployment

• Inflation

• Gross Domestic Product (GDP)

These indicators guide the Fed's choices about adjusting interest rates, which can affect mortgage rates indirectly.

Inflation

One of Trump’s key promises involves broad tariffs on imported goods, especially from China. Tariffs are essentially taxes on imports, and while they aim to protect American jobs and businesses, they often increase costs for consumers. For instance, if a 10% tariff is imposed on imported technology or food, prices may rise for Americans buying these goods. Imported products are often less expensive than domestic ones, and tariffs make foreign goods pricier, encouraging people to buy "Made in the USA" products. While this could benefit the U.S. economy long-term by supporting local businesses, in the short term, consumers may face higher prices.

Inventory

Trump’s pledge to increase deportations of undocumented residents could also affect the real estate market. For instance, if millions of undocumented people were removed from the U.S., certain real estate markets could experience a decrease in demand. In Maine, many homebuyers, particularly in areas like Androscoggin County, are "New Americans"—if this demand drops while supply remains steady, there could be less pressure on the market, which could help cool prices. Additionally, some Americans might consider moving away from "blue" areas, though it remains unclear how many people would follow through on this.

Pulling It All Together

Interest rates and inventory levels are two of the biggest factors influencing real estate prices. If Trump's proposed tariffs go into effect, we may see inflation and, potentially, higher prices in the U.S. When inflation rises, the Fed may respond by raising rates, which often reduces demand from buyers. However, if deportation policies significantly reduce the number of buyers, demand could cool, possibly softening prices.

Another factor the Fed monitors closely is unemployment. If tariffs lead to more U.S.-based jobs and deportations decrease the workforce, unemployment could fall even further. This would provide the Fed with reason to lower rates.

Overall Impact on Real Estate

The Fed is largely independent of the presidency and Congress. The current Fed Chair, Jerome Powell, has stated his intent to remain unaffected by the administration's influence. In response to current conditions, the Fed has already cut rates by 25 basis points, with additional cuts potentially on the way.

In the next six months, rates may decrease further, potentially drawing more buyers into the market by spring. However, the effects of proposed deportation plans on real estate inventory may take years to materialize, if they happen at all.

In the meantime, we may feel the impact of tariffs more quickly. The coming months could bring changes, but remember, the U.S. economy and real estate market tend to adapt gradually to outside forces.

Stay informed, and be ready for possible shifts in the market!

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