Whether we’re ready for it or not, the 2024 Presidential election is right around the corner.
As if this year hasn’t brought enough uncertainty, an election could be causing some to question their buying and selling plans…again.
On top of it all, real estate has been a front-and-center topic in the run up to this year’s election. So I'd bet, even if you aren’t asking these questions, you're probably thinking about them!
To get to the heart of this topic, it’s important to understand how the history of past presidential elections combined with today’s market factors might play out in real estate this time around.
Here’s what we know.
Home Sales Might Slow Down-But Not for Long
Historically speaking, home sales typically slow down in the fall following the spring and summer rush.
So will the election impact this even more?
This is what Ali Wolf, Chief Economist at Zonda, anticipates will happen:
“Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.”
Basically, people get a bit nervous about making big decisions during election time. But don’t worry – this slowdown is just temporary. History shows that home sales bounce back in December and keep going up the next year.
For instance, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows that after nine of the last eleven presidential elections, home sales increased the following year (check out the graph below):
This graph tracks home sales since 1978. Election years are in blue, and if sales went up the next year, it’s marked in green. The only two times sales dropped after an election are shown in orange.
Considering the current state of real estate across the country, we can anticipate that while a slow down may occur, its effects will only be temporary. Home sales have remained strong throughout the last couple of winters, and the competitive nature of today’s current market suggests this year should be no different.
Home Prices Don’t Fall, They Usually Rise
Now, what about home prices? Do they take a hit during election years? Not really.
Ryan Lundquist, a residential appraiser and housing analyst, says:
“An election year doesn’t alter the price trend that is already happening in the market.”
Home prices are pretty resilient – they usually go up year-over-year, no matter what. NAR’s latest data shows that after seven of the last eight presidential elections, home prices went up the following year (see the graph below):
Just like the sales graph, this one highlights election years in blue. The only time prices dropped after an election, marked in orange, was during the housing market crash – and that was a very unique situation. Today’s market is much different.
All the green bars show when prices rose the year after an election. So, if you are worried about your home losing value because of an election, you can relax – prices usually rise.
Mortgage Rates Should Continue to Trend Down
The economy is tightly connected to politics, and real estate is tightly connected to the economy. You know what’s also very connected to the economy and politics? Mortgage rates.
Looking back at the last eleven presidential election years, data from Freddie Mac shows that mortgage rates dropped from July to November in eight of them (see the chart below):
Most forecasts suggest that mortgage rates will ease a bit for the rest of the year.
If they’re right, this year will follow the trend of declining rates we’ve seen in previous elections. If you are looking to buy soon, this could be the news you've been waiting for. There’s no doubt that the past few years have been rocked by mortgage rate volatility.
And while experts aren’t projecting a big drop, steady decline in mortgage rates means better affordability for a lot of buyers out there.
Bottom Line
While the country’s economic state continues to be challenging, the Presidential election may cause some consumers to watch and wait in the months to come.
So, what’s the big takeaway? While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says:
“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”
Do you have questions about how what this means for you and your situation? Reach out for a 5-10 minute phone call and have your questions answered.
