Donald Trump is a successful businessman, regardless of what anyone says.  His many failures have helped make him a success.  And while I don’t agree with his use of eminent domain, most of the rest of his success is market oriented as far as we know.  It doesn’t rest on government funding.

Just because Trump has been successful in business doesn’t mean he will be a good president.  We often hear that the government needs to be run more efficiently like a business, but that is something we really shouldn’t hope for.  I certainly don’t want the IRS or the other alphabet agencies running efficiently.

You also can’t run the government like a business.  In the marketplace, the signals of profits and losses will allocate capital.  They tell entrepreneurs on whether to continue with any particular venture.  This includes Trump.  Imagine how many Trump products would be out there if the government bailed him out every time something failed by market standards.  In the marketplace, the losses told Trump to stop selling certain products.

One area where Trump has been particularly successful is in real estate.  But will that translate into him favoring a strong real estate market overall in the economy?

The kind of real estate Trump has been in is different from the real estate that most individuals deal with.  Trump didn’t make his money off of 4-bedroom houses.  However, you shouldn’t discount these as investments.  There are many millionaires (probably not billionaires) who made money buying middle class single-family homes.

In terms of middle class housing, I don’t think Trump is going to make much of a difference one way or another.  As I have said with many other aspects of the economy, it will still be the Federal Reserve that has the greatest impact.

If Trump really wanted to help the economy, he would seek to repeal as many federal regulations as possible, and he would seek to reduce federal spending as much as possible.

Interest rates have risen since Trump’s election.  The 10-year yield, as of this writing, is around 2.4%.  This has not been enough to fully take the steam out of the housing market yet, but higher rates from here will likely have an impact.

I don’t think it will be higher rates that will ultimately lead to lower housing prices.  If anything, we will see an economic downturn that will be accompanied by lower long-term rates.  This could send housing prices lower.

There are a lot of mixed opinions out there about real estate.  Some see a major housing bubble ready to implode.  However, I don’t think we will see anything like 2008.  Housing prices had already started to drop in 2007, but the financial crisis triggered a huge drop from there. (Or was it the other way around?)

The housing market is more local this time.  There is not a nationwide housing bubble like there was in the mid 2000s.  In many areas, prices are still not nearly as high as what they were during the peak.

Now, when it comes to San Francisco, that is a major bubble ready to burst.  The prices are naturally high because it is a big city with big money and strict zoning laws.  Many Chinese investors have gone to California to park their money.  But it really is a disaster waiting to happen.  If you live in an area like this, then you really should sell your house.

For most areas, it really comes down to common sense right now.  Do you have a comfortable mortgage payment?  Are you planning to sell your house in the next few years?  If prices drop by 10 to 20 percent, would it have any impact on you in the short term?

These are questions we should ask regardless of whether we think there is a housing bubble.  They are questions that people should have been asking in 2005.

Overall, I don’t think Trump is going to matter much to the real estate market over the next four years.  He can’t stop a recession.  Perhaps he could delay one with more Keynesian economics in the form of artificial stimulus.

If there is an economic downturn, expect housing prices to fall in many areas, particularly in the big cities.  However, I don’t think it will be as bad as the previous housing bust in most areas of the country.