Will the Election Impact the Real Estate Market?

2020 will be recognized as one of the most testing occasions of our lives. An overall pandemic, a downturn causing joblessness, and a degree of social turmoil; maybe never observed have all changed the manner in which we live. The real estate market is by all accounts unaffected, as another forecast projects there may be more homes purchased this year than last year.

As we reach the finish of this turbulent year, we’re planning for maybe the most combative presidential nomination of the century. 

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 in their report titled One House, Two House, Red House, Blue House. They noticed that in non-presidential years, there is a – 9.8% diminishing in November contrasted with October. This is the ordinary irregularity of the market, with a stoppage in movement that is typically found in fall and winter.

However, it also revealed that in presidential election years, the typical drop increases to -15%. The report explains why:

“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.”

Are those sales lost forever?

No. BTIG determined:

“This is temporary, which may ultimately result in deferred sales. 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, Ali Wolf, Chief Economist; agrees 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. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year.”

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.”

Again, overall sales should not be impacted in a significant way.

Bottom Line

If mortgage rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease; the real estate market should remain strong up to and past the election.

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