The election impact on the housing market is not as clear cut as you might think. The 2024 Presidential election is just months away. As someone who’s thinking about potentially buying or selling a home, you’re probably curious about what effect, if any, elections have on the housing market. Many consumers think that the DC housing market will immediately be flooded with new listings right after the presidential election in November. (Not likely.) Other consumers worry that prices will drop…. or prices will soar.

Does the Election in November Mean More Listings?

Sadly, there is very little likelihood that the market will be flooded with more homes for sale after the election – regardless of who wins.  While elections sometimes do mean new administrations and new employees, it doesn’t necessarily mean that those people who used to work for the previous administration are going to leave.  Those people have children in school and roots now in the DC area.  Instead of leaving, many of them get jobs in the private sector as consultants and lobbyists or they go to work in the Federal government as civil service employees.  They know that it’s nice living in Washington and they want to stay here.   In addition, when a new administration comes in, many of the people who start working for the administration already lived here.  They may well have worked for a previous administration.   They already own homes here and have nowhere else to go.  In short, don’t expect a big increase in inventory after a change in administration – or a continuation of the current administration.

The Impact of Presidential Elections on the Housing Market

Historically, Presidential elections have only had a small, temporary impact on the housing market. Here’s the latest on exactly what’s happened to home sales, prices, and mortgage rates throughout those time periods.

Do Elections Cause a Slowdown in Home Sales?

What is the election impact on the housing market – specifically home sales.  During the month of November, in years when the Presidential election takes place, there’s typically a slight slowdown in home sales. As Ali Wolf, Chief Economist at Zondaexplains:

“Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.

This is mostly because some people feel uncertain and hesitant about making big decisions during such a pivotal time. However, it’s important to know this slowdown is temporary. Historically, home sales bounce back in December and continue to rise the following year.

In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows after nine of the last 11 Presidential elections, home sales went up the next year (see graph below): No Caption Received

The graph shows annual home sales going back to 1978. Each year with a Presidential election is noted in blue. The year immediately after each election is green if existing home sales rose that year. The two orange bars represent the only years when home sales decreased after an election.

Are Home Prices Impacted by Elections?

What about home prices? What is the impact of elections on the housing market and home prices? Elections don’t tip the needle one way or the other.  As residential appraiser and housing analyst Ryan Lundquist puts it:

“An election year doesn’t alter the price trend that is already happening in the market.”

Home prices are pretty resilient. They generally rise year-over-year, regardless of elections. The latest data from NAR shows after seven of the last eight Presidential elections, home prices increased the following year (see graph below): No Caption Received

Just like the previous graph, this shows election years in blue. The only year when prices declined after an election is in orange. That was during the housing market crash, which was far from a typical year. Today’s market is different than it was back then.

All the green bars represent when prices rose the following year. So, if you’re worried about your home losing value because of an election, you can rest easy knowing prices rise after most Presidential elections.

Election Impact on Mortgage Rates

Mortgage rates are important because they affect how much your monthly payment will be when you buy a home.  No doubt, you probably want to know the election impact on the housing market interest rates. Looking at the last 11 Presidential election years, data from Freddie Mac shows mortgage rates decreased from July to November in eight of them (see chart below): No Caption Received

Most forecasts expect mortgage rates to ease slightly throughout the remainder of the year. If they’re right, this year will follow the trend of declining rates leading up to most previous elections. And if you’re looking to buy a home in the coming months, this could be good news, as lower rates could mean a lower monthly payment.

Bottom Line

 While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says:

“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”

For most buyers and sellers, elections don’t have a major impact on their plans.  While it’s natural to feel a bit uncertain during an election year, history shows the housing market remains strong and resilient. For help navigating the market, election year or not, let’s connect.

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