BUY NOW - Take Advantage of Uncertainty

As we head into fall, it’s common to see a bit of a slowdown in the housing market following the busy spring and summer seasons. But with an upcoming election, will this trend be more pronounced? Let’s take a closer look.

Will the Election Affect Home Sales?

According to Ali Wolf, Chief Economist at Zonda: “Usually, home sales remain steady compared to a non-election year, with November being the exception. In election years, November tends to be slower than usual.”

It’s normal for buyers and sellers to feel cautious about making big decisions during election time. But here’s the good news: this slowdown is usually temporary. Historically, home sales bounce back in December and continue to rise in the following year.

For example, 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. (See graph below that tracks home sales since 1978.)

What About Home Prices?

Will home prices be affected? Not likely. Ryan Lundquist, a residential appraiser and housing analyst, shares: “An election year doesn’t alter the price trend that’s already happening in the market.”

In fact, home prices tend to rise year-over-year, regardless of elections. NAR’s latest data reveals that in seven of the last eight presidential elections, home prices went up in the year that followed. The only time prices dipped was during the housing market crash, which was an exception.

So, if your clients are concerned about home values declining, you can reassure them — prices generally go up, not down.

What About Mortgage Rates?

Mortgage rates are also influenced by the economy and political events. Looking at the past eleven presidential election years, data from Freddie Mac shows that in eight of them, mortgage rates dropped between July and November.

Most projections suggest a slight easing of rates for the rest of the year, which could offer buyers some relief. While rates may not experience a dramatic drop, even a gradual decline could make homebuying more affordable.

Bottom Line…

While election years can cause some hesitation in the housing market, the effects are usually small and short-lived. As Lisa Sturtevant, Chief Economist at Bright MLS, explains: “Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”

That said, this election is shaping up to be anything but ordinary. Real estate professionals should stay informed on the latest market insights to guide their clients through any uncertainty. With the housing market being such a key topic, staying ahead of the news will help you provide valuable insights to your clients.

Stay tuned, stay informed, and let’s navigate this season together!

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