The 2024 presidential election is just a few months away. If you're considering buying or selling a home, you're probably curious how the election will affect the housing market, if at all.
This is a great question because buying or selling a home is a big decision, and it's natural to wonder how such a big event will affect your plans.
Historically, presidential elections have only had a small, temporary effect on the housing market. Here's an update on what's happened to home sales, prices, and mortgage rates throughout these periods.
Home Sales
Home sales tend to slow slightly in November during presidential election years, explains Zonda chief economist Ari Wolf.
“Typically, home sales are unchanged compared to non-election years except in November. In election years, November is typically slower.”
This is mainly because some people feel anxious or hesitant to make big decisions at such a critical time. However, it is important to understand that this slowdown is temporary. Historically, home sales recover in December and continue to increase in the following year.
In fact, according to data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR), 9 of the last 11 presidential elections have seen an increase in home sales in the year following the election (see chart below).
This graph shows the number of home sales per year since 1978. Years that had a presidential election are shown in blue. Years immediately following an election are shown in green if existing home sales increased during that year. The two orange bars represent the only years that saw a decrease in home sales after an election.
Home prices
What about home prices? Do they fall in an election year? Usually not. “Home prices tend to fall in election years,” said Ryan Lundquist, a home appraiser and housing analyst.
“Just because it's an election year doesn't change the price movements that are already happening in the market.”
Home prices have been remarkably stable; they generally increase year-over-year, regardless of election. According to the most recent data from NAR, seven of the last eight presidential elections have seen home prices increase in the year following the election (see chart below).
As with the previous chart, election years are shown in blue in this chart. The only years where prices fell after an election are shown in orange. This was during the housing market crash and was far from a normal year. Today's market is different.
Every green bar represents a time when prices increased over the following year, so if you're worried that the election will cause your home value to fall, take comfort in knowing that prices actually increase after most presidential elections.
Mortgage interest rates
Mortgage interest rates are important because they affect the monthly payment you'll make when buying a home. Looking at the last 11 presidential election years, mortgage rates fell from July to November in eight of them, according to data from Freddie Mac (see chart below).
Most forecasts expect mortgage rates to fall slightly over the rest of the year. If these predictions are correct, this year will follow a trend of declining interest rates that has been seen in most past elections. If you're looking to buy a home in the coming months, this could be good news, as lower interest rates could mean a lower monthly payment.
What this means for you
So what's the takeaway? Presidential elections do have some effect on the housing market, but the impact is usually small and temporary. “The housing market is changing, but it's not going to be the same for everyone,” said Lisa Sturtevant, chief economist at Bright MLS.
“Historically, the housing market tends to be less different in election years than in other years.”
For most buyers and sellers, the election won't have a major impact on their plans.
Conclusion
While it's natural to feel some anxiety during an election year, history has shown that the housing market remains strong and resilient. Have questions about estate planning? Don't hesitate to contact The Belt Team, and we'd love to put our experience to work for you.
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