Will The 2020 Presidential Election Impact Real Estate?
This year has been pretty crazy! As we come to the end of the year with the presidential election, a lot of people are curious about what's going to happen with the real estate market. And I think it's important to look at how the market has responded to past presidential election years.
One big question that a lot of people have is if there's a drop off in home sales in a presidential election year. BTIG, a research and analysis company, looked at new home sales from 1963 all the way through 2019. They noted that in non-presidential election years, there's about a 9.8% decrease in home sales in November compared to October. This is normal seasonality of the market with a slow down that's usually seen in fall and winter. However, the report also indicated that during presidential election years, the decrease goes to around 15%. The report goes on to explain why, stating that home buyers seem to be more cautious in the face of election uncertainty.
So are those sales lost forever? No, BTIG determined that the caution was temporary and ultimately results in deferred sales. The economy, jobs, consumer confidence, and interest rates all have far more meaningful roles in the home purchase decision than the presidential election results.
In a separate study done by Meyers Research and Zonda, Ali Wolf, chief economist agrees that those purchases are just pushed out until after the election. History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after the presidential election is typically the best out of the four year cycle. This suggests that demand for new housing is not lost due to election uncertainty, but rather it gets pushed out to the following year.
So will it matter who is elected? To some degree, but not in the overall grand scheme of things. Consumer confidence plays a significant role in a person's desire to buy a home. So how may consumer confidence impact the housing market post-election? The BTIG report covers that as well, stating that a change in administration might benefit trailing blue county housing dynamics or the reelection of president Trump could continue to propel red county outerperformance.
Again, overall sales shouldn't be impacted in a significant way depending on who wins the election.
Bottom line, if mortgage rates continue to remain near all time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market should stay strong up to and past the election.