As the 2024 Presidential election approaches, it's set to introduce a new wave of uncertainty. This uncertainty may prompt clients to reconsider their buying and selling plans. With real estate being a key topic in this election, clients are likely thinking about the potential impacts, even if they haven’t expressed their concerns.
To get a clearer picture of how this election might influence the real estate market, we need to look at historical election trends and the current market landscape.
Temporary Slowdown in Home Sales
Traditionally, home sales slow down in the fall after the busy spring and summer periods. But what happens during an election year?
Ali Wolf, Chief Economist at Zonda, predicts that home sales during election years remain relatively stable compared to non-election years, except for a slowdown in November. This is due to the hesitation people feel about making major decisions around election time. However, this slowdown is temporary, with home sales rebounding in December and continuing to increase the following year.
Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) supports this, showing that after nine of the last eleven presidential elections, home sales increased the following year.
Given the current state of the real estate market, any slowdown is expected to be short-lived. The market's competitive nature suggests that strong home sales will continue through the winter months.
Home Prices Tend to Rise
Do home prices decline during election years? Not usually. According to Ryan Lundquist, a residential appraiser and housing analyst, election years don't typically change the existing price trends in the market.
Home prices tend to be robust, generally increasing year-over-year, regardless of election outcomes. NAR’s latest data indicates that after seven of the last eight presidential elections, home prices rose the following year.
The only exception was during the housing market crash, a unique event that doesn't reflect current market conditions. Therefore, clients need not worry about home values dropping due to the election; prices usually rise.
Mortgage Rates Likely to Decrease
The economy and politics are closely linked, and real estate is heavily influenced by both. Mortgage rates, in particular, are sensitive to economic and political changes. Historical data from Freddie Mac shows that in eight of the last eleven presidential election years, mortgage rates fell from July to November.
Most forecasts suggest a slight decline in mortgage rates for the rest of the year. If these predictions hold, this year could follow the trend of decreasing rates seen in previous elections, making homes more affordable for buyers.
Conclusion
While the nation's economic situation remains challenging, the Presidential election might lead some consumers to adopt a cautious approach in the coming months. However, the overall impact on the housing market is usually minor and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, observes, the housing market during presidential election years doesn't differ significantly from other years.
Given the unique nature of this election and the increased focus on housing, it’s crucial for real estate professionals to stay informed about market trends and insights. This knowledge will help you provide valuable guidance to your clients during these uncertain times.
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