The 2024 presidential election is just a few months away. As someone who is thinking about potentially buying or selling a house, you’re probably curious to know what effect, if any, elections have on the real estate market. It’s a great question because to buy or sell a home is a big decision, and it’s natural to wonder how such a big event could affect your plans. Historically, presidential elections have only had a small and temporary impact on the real estate market. Here’s the latest on exactly what’s been happening with home sales, throughout those time periods. Home sales During the month of November, in presidential election years, there is typically a slight slowdown in home sales. As Ali Wolf, chief economist of zonda, explains: “Home sales are generally unchanged compared to a non-election year, with the exception of November. In an election year, November is slower than normal.“ This is mainly because some people feel insecure and hesitant to make important decisions during such a crucial time. However, it is important to know that this slowdown is temporary. Historically, home sales rebound in December and continue to rise the following year. In fact, the data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows that after nine of the last 11 presidential elections, home sales increased the following year (see chart below): The graph shows annual home sales since 1978. Each year in which there is a presidential election is indicated in blue. The year immediately after each election is green if existing home sales increased that year. The two orange bars represent the only years in which home sales declined after an election. House prices What’s happens with housing prices? Do they fall during election years? Usually not. As residential appraiser and home analyst Ryan Lundquist puts it: “An election year does not alter the price trend that is already occurring in the market.” Home prices are quite resilient. They generally increase year after year, regardless of the elections. The latest data from NAR shows that after seven of the last eight presidential elections, home prices increased the following year (see graph below): Like the previous graph, this one shows the election years in blue. The only year where prices went down after an election is in orange. That was during the housing market crisis, which was far from a typical year. The current market Is different than it was back then. All green bars represent when prices rose in the following year. So, if you’re worried about your home losing value because of an election, you can rest easy knowing that prices rise after most presidential elections. Mortgage rates Mortgage rates They are important because they affect the amount of your monthly payment when you buy a home. If we analyze the last 11 years of presidential elections, data of Freddy Mac shows that mortgage rates decreased from July to November in eight of them (see chart below): Most forecasts expect mortgage rates will decrease slightly during the rest of the year. If they are right, this year will continue the trend of declining rates that preceded most previous elections. And if you’re thinking about buying a home in the coming months, this could be good news, as lower rates could mean a lower monthly payment. What this means to you So, what’s the big takeaway? While presidential elections have some impact on the real estate market, the effects are typically small and temporary. As stated by Lisa Sturtevant, chief economist of MLSsays: “Historically, the real estate market doesn’t tend to look much different in presidential election years compared to other years.” For the majority of buyers and sellers the elections don’t have a major impact on their plans. While it’s natural to feel a little unsure during an election year, history shows that the housing market remains strong and resilient.
