In a Presidential election year, there's lots of talk about the candidates, their proposed policies, and speculation about who the next President will likely be. As a realtor, I also receive a fair amount of questions about the impacts to housing during this time. And while it's normal to feel some apprehension about change (in any direction), here's why you shouldn't expect impacts to the real estate market as a result of the election.

According to Keeping Current Matters, an informational resource for real estate professionals:

1. Demand is Strong among Millennials

Millennials, those born between 1981 and 1996, are the nation’s largest generation. They've also begun entering the housing market in larger numbers as they reach the age to marry and have children – two key drivers of homeownership. According to the Wall Street Journal:

“Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.”

2. Mortgage Rates Are Historically Low

Interest rates are currently under 3%! These rates are understandably driving demand across the board for first-time and repeat home buyers alike. In fact, the strong demand created by low interest rates has been a counter to the other events we're experiencing as a result of the pandemic, such as unemployment and recession.

Freddie Mac just forecasted mortgage rates to remain low through next year:

“One of the main drivers of the strong housing recovery is historically low mortgage interest rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”

3. Prices Continue to Grow

As much as we've been hearing about low interest rates, we've also been hearing about low housing inventory. In fact, the continued lack of supply of existing homes for sale coupled with the surge in buyer demand has experts forecasting strong price appreciation through the end of 2021.

4. History Repeats Itself

Though it’s true that the market slows slightly in November when it’s a Presidential election year, the pace returns quickly. According to a Homebuilding Industry Report by BTIG, the temporary slowdown could be because:

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

I also like to remind buyers that our elections always fall in November, which is typically when we start to see a seasonal slow down as well as people start turning their attention to the holidays. However, for savvy home shoppers, this is when they might find good deals on homes while facing less competition, just by staying the course.

Ali Wolf, Chief Economist for Meyers Research, also notes:

“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 as long as the economy stays on track.”

What's the Bottom Line?

With the results of the Presidential election still being contested, we likely have a few more weeks of living with some uncertainty. However, as Matthew Speakman, an economist at Zillow, explained:

“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market – which has basically withstood every pandemic-related challenge to this point – will continue its strong momentum in the months to come.”

 

Contact me with any questions!