Post-Midterm Election Breakdown; Impact on MF Industry Will Likely Be Minimal
- Nov 03, 2010
New York–Senate Majority Leader Harry Reid won the fight to keep his seat in Nevada, and the Democrats narrowly held on to their majority in the Senate, but Tuesday’s midterm elections were dominated by a flood of GOP victories. Republicans won at least 60 seats to take back control of the House, surpassing the 52 seats they won in the 1994 midterm landslide. Results are still being officially tallied, but Representative John Boehner is certain to replace Nancy Pelosi as Speaker of the House, and the electoral map that had turned a deep shade of blue in 2008 has been redrawn, now looking like a dead heat.
Republicans won important victories in the swing states of Ohio, Florida, Pennsylvania, Michigan, Virginia, Wisconsin and Indiana. Democrat Chris Coons won Joe Biden’s former Senate seat in Delaware over Tea Party-backed Christine O’Donnell, but President Obama’s former seat in Illinois went to Republican Mark Kirk, who beat out Alexi Giannoulias. Republicans Rand Paul and Marco Rubio won Senate races in Kentucky and Florida, respectively, both of whom rose in the primaries behind Tea Party support before being absorbed by the GOP money and platform.
Republicans also flipped at least 10 states from blue to red in gubernatorial races. They needed only three of those victories to gain a national majority. By redistricting state electorates, the role of governors can influence national politics in its own way.
The Republican sweep can be attributed to widespread discontent with not only the state of the nation’s economy, but also with the state of the nation’s politics. More than a third of Americans now describe themselves as Independents, the highest that number has been since 1992. Republicans have entrenched themselves in obstructionism since Obama took office, and politics is more partisan than ever. With the lines redrawn by this midterm election, it will be up to both parties to start compromising and working together. How that will go is anyone’s guess.
As to how this affects multifamily, it is of course early to be making predictions—as committees will still need to be chaired over the next couple months—but insiders anticipate that effects to the industry will be minimal.
“Despite the new faces (and possibly leadership) in Congress, I see little to no motivation for any massive near-term changes to the structure of the GSEs,” Dan Fasulo, managing director of Real Capital Analytics tells MHN, regarding the likelihood of the new Congress tinkering with the main source of funding in recent years for the multifamily industry, Fannie and Freddie. “The Democrats are philosophically opposed, and despite Tea Party influence, the Republicans will be too scared to tinker with the most prolific source of capital for the industry in the midst of a difficult economic environment.”
Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland, doubts that the new Congress will have the spine to make any sudden moves in the wake of the election. “The election will not bring immediate significant changes,” he says.
(With inputs from Dees Stribling)