Prospective homebuyers in the United States face many challenges: Lack of supply, strong demand, and persistently high interest rates make negotiating the housing market difficult for many.
Read more: How to qualify for an affordable mortgage
The looming election presents another factor that those looking to get onto the property buying ladder must consider.
Home Prices and Mortgage Rates
“There are certainly artificial factors in home prices and mortgage rates, which can lead to greater price and interest rate volatility in election years than non-election years, but those moments of volatility are fleeting,” said Jason Obradovich, chief investment officer at mortgage lender New American Funding.
Read more: First Time Home Buyers Guide
“Overall, the impact on the market has been slower and less susceptible to emotional swings. The housing market is always best viewed with a long-term perspective.”
How economic policies affect things
Inflation, supply shortages and high interest rates are just some of the obstacles preventing progress in this area, Obradovic said, warning that it may be difficult for parties to ease inflationary pressures in one fell swoop.
“The housing market is currently struggling with a shortage of inventory and home construction not keeping up with demand. Additionally, inflationary pressures are keeping interest rates artificially high and there are no policies any political party can realistically implement to help relieve inflationary pressures,” he said.
A “For Sale” sign is posted in front of a home for sale in San Francisco, California, on February 20, 2023. The upcoming election is another factor to consider for those looking to buy a home. A “For Sale” sign is posted in front of a home for sale in San Francisco, California, on February 20, 2023. The upcoming election is another factor to consider for those looking to buy a home. View more Justin Sullivan/Getty Images
“In my opinion, the housing market will not return to a healthy state until inflationary pressures have largely subsided and the FOMC has cut interest rates. [Federal Open Market Committee] “Interest rates can start to fall, which will allow homeowners to buy and sell homes more regularly and supply will start to catch up.”
To overcome U.S. supply problems, future administrations must prioritize new construction, Obradovic said.
“I encourage either administration to enact policies that encourage homebuilding. Increasing housing supply is the soundest long-term strategy to help unlock a frozen and largely unaffordable market. It will help first-time homebuyers find affordable housing, help those looking to expand or downsize, and help those looking to relocate to new areas.”
How the Election Cycle Affects the Housing Market
“What typically impacts the housing market most in an election year is the market's reaction to the election results. If the market believes that the party that wins the election will stimulate growth, we could see a positive effect on the overall economic outlook,” Obradovic said.
“The challenges affecting the housing sector today are unfortunately structural rather than policy driven, which means it will be very difficult for any administration to take actions that will have a real impact on the market.”
What homeowners should be aware of
To navigate the current market, Obradovic recommends paying more attention to the decisions made by the Federal Reserve rather than the political maneuvering ahead of the November elections.
“Between now and the election, the Fed's actions, or lack thereof, will have a greater impact on markets than the machinations of political competition. If the Fed is confident enough to cut interest rates in the coming months, interest rates will fall, leading to improved homebuyers' ability to afford homes.”
“Ultimately, prospective homebuyers need to monitor the market and be aware of what's going on, but also be ready to take advantage of opportunities when they arise,” he said.
Experts have previously warned that American cities may be failing to tackle the problem of rising home prices.
A working paper from the Joint Center for Housing Studies at Harvard University argued that continuing to build suburban housing in the hopes of reducing urban housing costs may not be effective.
The report's preliminary findings suggest that suburban housing expansion “has little effect on urban housing affordability or the well-being of low-income urban households.”
Newsweek previously compiled a map showing the US cities with the biggest home price increases since 2019.
Have a story we should cover? Have a question about the housing market? Have a question about the 2024 presidential election? Drop us a line at LiveNews@newsweek.com.
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Newsweek is committed to challenging conventional wisdom, seeking common ground and finding connections.