Will the Presidential election affect the Real Estate Market?
A quick review of presidential year real estate markets
As we come to the end of this tumultuous year, we're preparing for perhaps the most contentious presidential election of the century. Today, it's important to look at the impact past presidential election years have had on the real estate market.
Is there a drop-off in home sales during a presidential election year?
BTIG, a research and analysis company, looked at new home sales from 1963 through 2019 and found that:
In non-presidential years, there is a -9.8% decrease in November compared to October in new home sales. This is the normal seasonality of the market.
In presidential election years, the typical drop increases to -15% (an additional 5% decrease in sales).
Are those sales lost forever?
No. BTIG determined:
This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a presidential election result in the months that follow.
In a separate study done by Meyers Research & Zonda, they conclude that those purchases are just delayed until after the election:
History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle.
Will it matter who is elected?
To some degree, but not in the overall number of home sales. As mentioned above, consumer confidence plays a significant role in a family's desire to buy a home. How may consumer confidence impact the housing market post-election? The BTIG report covered that as well:
A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.
Either way, overall sales should not be impacted in a significant way.
If mortgage rates remain near all-time lows, the economy continues to recover, unemployment continues to decrease and they find a vaccine for the coronavirus, the real estate market may remain strong well through 2021.