The first week of January is usually a quiet time for housing and for policy makers in Washington D.C. Even in a transition year, despite the perfunctory obligations to certify elections, plan for inaugurations, and swear in new members of Congress, it is typically uneventful. 2021 is an entirely different scenario, and today’s Georgia news will have a meaningful impact on President-elect Biden’s housing agenda.

The attempts to undermine the already confirmed electoral college has brought armed protestors to D.C. and is literally dividing the party of Lincoln between those willing to fall on their swords for the president and those viewing a challenge to this process as a constitutional bridge too far.

No matter where you stand, it brings to mind that Glenn Frey song so appropriate for this January chill, “The Heat Is On.”

But this first week also added “Georgia on my mind” to the song repertoire with the Georgia runoff races. What is at stake is significant. With the two Georgia Senate seats flipping to the Democrats, the Senate is at a 50-50 tie with the incoming vice president as the deciding vote.

This outcome would put the majority leadership in the hands of New York Sen. Chuck Schumer and create significant opportunity for President-elect Biden to implement many more aspects of his agenda —with some potentially large impacts to housing and mortgages.

With it now looking like the two winners in Georgia will be the Democratic candidates, the entire playing field changes. Let’s be clear though, a one-vote majority via a Harris vote is not enough to do aggressively progressive acts.

With many moderate Dems in the Senate, the only way an agenda can succeed is to retain the entire party as one voting bloc. With several Democratic senators coming from red states, they cannot risk being overly progressive and this will act as a governor to keep policies from going too far to the left.

But there are several things that can happen. Here are some key possibilities:

1. A larger stimulus package would be more than likely to pass and could include the infamous $2,000 to individuals and more support for states and small businesses. Several analysts have already published research today raising the GDP forecast for 2021. Macropolicy Perspectives stated this today, “GDP should grow at a pace above 4% in 2021 and above 3.5% in 2022. After the passage of the $900bn package but before Georgia, we had expected 3.6% and 3.0%.” The general consensus is that the Georgia outcome will result in more stimulus for an economy needing to grow.
2. Presidential nominations will get to be confirmed quicker. Since the Senate majority will now be Democrat, the calendar gets managed by Sen. Schumer, which will facilitate far speedier confirmations to support the president for the key roles at Treasury, HUD, CFPB, and more.
3. To that end, Sen. Sherrod Brown, D-Ohio, will likely be the new chair of the powerful Senate Banking Committee, which could result in closer scrutiny on larger banks and their CEOs.
4. President-elect Biden’s housing agenda includes a proposal for a $15,000 first-time homebuyer tax credit. Whether that full amount can make it through the legislation process, the odds for some form of homebuyer tax credit will now be much higher, providing even more stimulus to the real estate economy. And while inventories may be low, builders will certainly be scrambling to build as many new homes as possible to leverage the potential revenues from this new pool of buyers, which will likely mean increases to new home sales, particularly in the second half of the year.
5. Other stimulus measures you might expect would include some student loan forgiveness, enhancements to the Affordable Care Act, increased subsidies for Medicare eligibility, and some “green’ focused legislation.
6. The tax bill passed during the Trump administration will likely get revised, resulting in an increase to the corporate tax rate and the elimination of some benefits that were provided to high-income earners.
7. Finally, moves to confirm judges preferred by the incoming President will have a higher probability of getting voted into office. This is a benefit of the majority being in power.

There will certainly be other areas of focus including the GSEs, CRA, and more, but the key elements affecting housing and mortgage finance will be seen in the points above.

The bottom line is this: A single vote majority means a constrained ability to go overboard on progressive objectives from the likes of Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez, but it does help expedite the ability of the incoming president to build his administration and enact some of the efforts that even some moderate Republicans supported.

While political divisiveness has polarized much of America, housing and mortgage finance has always been viewed as essentially non-political and the ability to forge broad coalitions among both parties has a better chance for success than many other issues this next Congress and president will face.