The Cal State Companies: Center for Real Estate Studies ¨ Cal State Properties ¨ Cal State Investment LTD Partnership
WHEN WE COME BACK….
WHEN WE COME BACK….after this coronavirus commercial break whoever is our new leader will have to manage the economy as it restarts in earnest in 2021. Finances have been overextended by the massive fiscal packages approved so far, and hard choices will need to be made about whether to push ahead with further stimulus, or to try to constrict spending as the recovery gets underway. Therefore, we do not believe that tax policy will be at the top of the policy agenda for either of the presidential candidates after inauguration. We can imagine that taxes might be gradually used over time to strengthen fiscal ratios , where the Congressional Budget Office estimates that the debt-to-GDP ratio may reach 120% over the coming years. In addition, it is possible that tax incentives will be created to promote a more sustainable consumer attitude toward scarce resources. Whether this may hurt earnings or would even support earnings will depend on the availability of technology to support the ability of consumers to adopt more sustainable behavior.
Calstatecompanies recommends a long-term investment approach, the temptation admittedly exists to position real estate investments to take advantage of, or hedge against, potential election outcomes. We caution investors against doing so at this time, but instead advise them to be ready to alter their investments as new information arises. One reason for this is that the election outcome is highly uncertain, and positioning right now for a specific outcome leaves it vulnerable to the risk of a different outcome, with different real estate market consequences. Instead, we recommend tactically adjusting real estate investments to reflect the evolving outcome probabilities and the policies likely to be adopted in each case. The implied rationale for this approach is to maintain diversification so that a single outcome does not cause significant financial agony. In other words, we believe that the elections will have a more short-term impact on the real estate markets. Consumers adapt to changed policies over time and enhance their return continuously. Therefore, a diversifying your real estate investments based on the research reports issued by the calstatecompanies Market Cycles will give you the information you need to make sound investment decisions.
ABOUT THE AUTHOR: Eugene E. Vollucci, is considered to be one of the foremost authorities on real estate taxation and investing and has authored books in these fields published by John Wiley & Sons of New York. He is the Director of the Center for RE Studies, a real estate research organization. To learn more about the Center, please visit our web site at http://www.calstatecompanies.com