How Presidential Elections Impact the Housing Market
Market insights and trends
Aloha, Lance Owens (RB) with LUVA Real Estate
As a seasoned REALTOR® in Hawaii with two decades of experience, I often encounter questions about how major events, like presidential elections, affect the housing market. With the next election on the horizon, it’s a good time to explore this topic in detail. Based on historical data and expert analysis, here’s a comprehensive look at how the housing market has responded to past presidential elections.
Home Prices: A Steady Ascent
Historical Trends in Home Prices
One of the most reassuring trends for homeowners and potential buyers is the consistent rise in home prices following presidential elections. Data shows that home prices increased after 7 of the last 8 presidential elections. This indicates that the market tends to follow its existing trajectory, and prices generally rise, even in election years. The U.S. Annual Median Sales Price of Existing Single-Family Houses graph illustrates this trend clearly, highlighting the growth in both election years (marked in blue) and the years following elections (marked in green).
Why Do Prices Rise?
The reasons behind this trend are multifaceted:
- Economic Stability: Often, the underlying economic conditions and policies influencing the market are established long before the election, ensuring stability.
- Market Momentum: The housing market has its momentum, driven by factors such as supply and demand, interest rates, and demographic trends, which usually continue regardless of the election outcome.
Home Sales: Rebounding Post-Election
Sales Patterns Around Elections
When it comes to home sales, the trend is similarly positive. Historical data reveals that home sales went up after 9 of the last 11 presidential elections. While there is a slight slowdown in sales during election years, especially noticeable in November, these dips are temporary. The U.S. Annual Existing Home Sales graph shows a clear pattern of recovery and growth in the years following elections.
Factors Influencing Sales
Several factors contribute to this pattern:
- Buyer Confidence: Uncertainty during election periods can make buyers hesitant. However, once the election concludes and the political landscape becomes clearer, confidence returns, and so does buyer activity.
- Interest Rates and Affordability: Lower interest rates often accompany election years, making mortgages more affordable and stimulating sales.
Mortgage Rates: A Downward Trend
Election Year Interest Rates
Mortgage rates have shown a tendency to decrease slightly from July to November in 8 of the last 11 presidential election years. This pattern is detailed in the graph showcasing changes from July to November of recent election years. The general decrease in rates during this period can make home buying more attractive by lowering borrowing costs.
Why Do Rates Decrease?
Several reasons may account for this trend:
- Economic Policies: Central banks might adjust policies to maintain economic stability, often resulting in lower interest rates.
- Market Reactions: Financial markets often anticipate changes and react accordingly, sometimes driving down interest rates in the short term.
Expert Insights: A Broader Perspective
According to Lisa Sturtevant, Chief Economist at Bright MLS, the housing market does not typically look very different in presidential election years compared to other years. This insight is crucial for both buyers and sellers, indicating that while there may be minor fluctuations, the overall market dynamics remain robust and predictable.
Navigating the Market
As we approach the upcoming election, understanding these historical trends can help you make informed decisions. Whether you are considering buying, selling, or simply curious about the market, it’s essential to base your decisions on comprehensive data and expert advice.
If you have any specific questions or need personalized guidance, feel free to reach out. Together, we can navigate the market confidently, ensuring that your real estate goals are met regardless of the election cycle.
Contact Me
For more insights and tailored advice, let’s connect! Your real estate journey in Hawaii is my top priority, and I’m here to help you every step of the way.
