Tuesday, October 22, 2024 / by Tov Charm
How Election Years Affect the U.S. Residential Real Estate Market
The historical effect of election years on the U.S. residential real estate market reveals subtle yet significant trends. While uncertainty typically slows down housing activity before Election Day, the market quickly regains momentum once the political landscape becomes clear. Here’s a breakdown of how presidential election years affect real estate, based on historical data.
1. Pre-Election Jitters: A Cautious Market
In the lead-up to elections, both buyers and sellers often hesitate. Many adopt a "wait-and-see" attitude, anticipating how a new administration's policies might impact interest rates and housing affordability. As a result, home sales usually dip before the election.
2. Post-Election Rebound: Confidence Returns
Once the election results are in, the market typically rebounds as uncertainty fades. Historically, after 9 of the last 11 elections, home sales increased in the following year. Buyers and sellers regain confidence, knowing which policies will be in place for the foreseeable future.
3. Mortgage Rates: A Driving Force
A major factor in post-election real estate growth is mortgage rates. Mortgage rates have dropped after 8 of the last 11 elections, making homeownership more affordable and stimulating demand. As rates stabilize, more buyers are encouraged to enter the market.
4. Home Prices: Stability Amid Uncertainty
Despite election-related hesitancy, home prices have remained stable or even increased during election years. Existing home prices rose after 7 of the past 8 elections, and new home prices have consistently climbed following 10 of the last 11 elections.
5. Long-Term Effects: Policy Changes
While the immediate impact of elections is often a boost in market activity, the long-term effects depend on the policies of the newly elected administration. Changes in tax laws, mortgage regulations, or housing incentives can shape the market for years to come.
In Conclusion:
Election years may introduce short-term uncertainty in the real estate market, but history shows that it bounces back swiftly once the votes are counted. For buyers and sellers, timing matters, but the market's resilience ensures that the long-term outlook remains strong.
Interested in learning more about the market? Contact us today for personalized advice on buying or selling during an election year!