Do Elections Impact the Housing Market?

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The 2024 presidential election is just months away. As someone who is considering buying or selling a home, you're probably wondering what impact elections have on the housing market.

It's a great question because buying or selling a home is a significant decision, and it's natural to wonder how such a major event will affect your plans.

Historically, presidential elections have had a minor, temporary impact on the housing market. Here's an update on what happened to home sales, prices, and mortgage rates during those time periods.

Home Sales

During the month of November, when the Presidential election is held, home sales typically slow slightly. Ali Wolf, Zonda's Chief Economist, explains:

“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.”

This is primarily due to some people's uncertainty and reluctance to make major decisions at such a critical time. However, it is important to understand that this slowdown is only temporary. Historically, home sales rebound in December and continue to rise the next year.

In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) show that after nine of the last eleven Presidential elections, home sales went up the next year.

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The graph depicts annual home sales dating back to 1978. Every year with a presidential election is highlighted in blue. The year immediately following each election is green if existing home sales increased. The two orange bars show the only years in which home sales fell after an election.

Home Prices:

How about home prices? Do they drop during election years? Not usually. According to Ryan Lundquist, a residential appraiser and housing analyst,

“An election year doesn’t alter the price trend that is already happening in the market.”

Home prices are fairly resilient. They generally increase year after year, regardless of elections. According to the most recent NAR data, home prices have risen in the year following seven of the last eight presidential elections.

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Similar to the previous graph, this shows election years in blue. The only year in which prices fell following an election is highlighted in orange. That occurred during the housing market crash, which was not a typical year. The market today is not the same as it was in the past.

All green bars represent price increases the following year. So, if you're concerned about your home losing value as a result of an election, you can rest assured that prices typically rise following presidential elections.

Mortgage Rates

Mortgage rates are important because they determine how much your monthly payment will be when you purchase a home. Mortgage rates fell from July to November in eight of the last eleven presidential election years, according to Freddie Mac data (see chart below).

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Most forecasts predict that mortgage rates will fall slightly for the rest of the year. If they are correct, this year will continue the trend of declining rates that has preceded most previous elections. And if you plan to buy a home in the coming months, this could be good news because lower rates mean a lower monthly payment.

What Does This Mean for You?

So, what's the biggest takeaway? While presidential elections have an impact on the housing market, the effects are typically minor and temporary. Lisa Sturtevant, Bright MLS's Chief Economist, says:

“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”

Most buyers and sellers don't let elections influence their plans.

Bottom line.

While it is natural to feel uncertain during an election year, history shows that the housing market remains strong and resilient. Let's connect if you need help navigating the market, election year or not.

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