With every presidential election, there is a wave of uncertainty among consumers. People wonder how either candidate's policies may affect their cost of living, investments, or even the housing market.
While many believe that the next president may significantly alter the direction of mortgage rates or home prices, housing economists have shown that elections have little to no impact on the housing market. When we look at the data, it’s clear to see that if anything, the election only has a very temporary effect on real estate, largely tied to the uncertainty that comes along with it.
Many would-be buyers and sellers choose to wait for the election results before making a move, which dampens the pace of the market. And this is the only ‘real’ impact that presidential elections have on real estate – a slight slowdown while consumers wait it out. But at the same time, real estate has predictable seasonality - we always see the market slow down in the fourth quarter as consumers gear up for the holiday season.
Homes tend to stay on the market longer leading up to the new year while the number of home sales also declines. Looking at the charts below, you can see that days on market reach their highest point around January, while home sales reach their lowest point. These charts reflect the Denver Metro, but the same trends play out across almost all markets.
So, the uncertainty surrounding the presidential election may incrementally add to the seasonal trends, but there is no evidence of any long-term impact – regardless of who is elected.
Keeping Current Matters, a prominent resource in the real estate industry, published the chart below that shows how home sales went up after every one of the last eight elections. You can clearly see the impact of the housing bubble around 2008, but other than that home sales continue to trend upward after every election since 1992.
As you probably know by now, the housing market and home values are driven by a diverse combination of factors like overall supply and demand, the strength of the jobs market, and obviously mortgage rates.
The best time to make a move is when it’s the right time for you and your family. Based on historical data, the evidence suggests that you shouldn’t put a lot of weight into the election as part of your decision-making process.
