Summer is winding down, a new school year is upon us, and in just a few months, we’ll have another presidential election. Don’t worry – we’re not here to tell you who to vote for.
But every four years, right around this time, we find ourselves answering questions and comments from our clients that center around the same topic: should I buy or sell during an election year?
There’s a common misconception that election years have negative impacts on the housing market or that you should wait to see how everything “shakes out” after the election. While some housing events have occurred during election years, they are not direct correlations.
For example, in 2008, homeowners saw values fall by 12%. However, this wasn’t a result of Barack Obama winning the election. The market in 2008 was a result of the early 2000s housing bubble finally bursting – something that would have happened regardless of who was elected.
Before that, in 2004, George W. Bush was elected and home prices were soaring at nearly 14%. Again, this is due to that same housing bubble starting to build, not because of the election.
More recently, the 2020 election put President Biden in office, and the following months saw home values up 19%, a statistic fueled by low interest rates and buyers flooding the market post Covid.
While these examples were not direct results of elections, there are some election year trends that show generally positive outcomes for both buyers and sellers.
The housing market is driven by supply, demand, and mortgage rates, with very little impact stemming from the President. Mortgage rates play a key role in the number of buyers entering the market, and historically, rates have dropped slightly in months leading up to elections. Many forecasters predict that rates will come down this year, and we certainly hope these predictions are correct.
Home sales also tend to trend upwards after elections. Looking back to 1990, The Department of Housing & Urban Development and the National Association of Realtors found that home sales went up after 9 of the past 11 presidential elections, as demonstrated in the chart below.
At the end of the day, economists tend to agree that an election year has little influence on the housing market. Housing trends at the time of an election tend to continue, and historical events such as 2008 are not direct correlations to the winning candidate. Overall, and historically, an election year is still a good time to sell, and if mortgage rates drop as predicted, we should see more buyers entering the market.
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