Homebuying in an Election Year: Impacts & Opportunities Driving Buyer Trends

Election years can bring uncertainty. Whether we like it or not, the corresponding presidential election cycle has an impact – either directly or indirectly – on businesses across industries.

In real estate, this general uncertainty may translate to fluctuating market conditions, shifts in regulatory environments and changes in confidence. But from what history shows us, do election years really slow down home sales?

A look back at past election years and an understanding of market dynamics can help buyers and sellers better navigate the complexities of the real estate market and make more informed decisions in the face of political change.

Here are a few things to consider if you’re looking to buy or sell this year.

Over the past 40 years, home prices have shown notable resilience during election years, with an average increase of 4.8% versus 4.4% in non-election years, according to Bankrate. Additionally, in seven of the past eight U.S. presidential elections, home prices increased the following year according to National Association of REALTORS® (NAR) data. The only exception was during 2008, an outlier driven by broader economic downturns rather than election-related factors.

It is typical during these cycles to see a brief slowdown in home sales in November, likely due to indecision and apprehension among potential buyers and sellers. Data from the Department of Housing and Urban Development (HUD) and NAR shows that home sales have tended to bounce back in post-election Decembers – maintaining an upward trajectory the following year. Additionally, we may be in for an active Q4 this year. High interest rates delayed the normal selling season – so while the spring/summer season was slower than usual, winter could be more active than usual.

Mortgage rates have tended to decrease slightly in the months leading up to the election, with Freddie Mac data showing a decline from July to November. This trend provides further incentive for buyers to act during these periods.

Recent trends reveal a gradual shift in the housing market as it rebalances from the previously dominant seller’s market toward more stable conditions.

According to the latest RE/MAX National Housing Report, inventory levels have risen, offering buyers a broader selection of homes and easing the competitive pressure. The increase in available properties is fostering a more level dynamic, where buyers have more negotiating power and sellers may need to be more flexible with their terms. As a result, the market appears to be moving toward a more stable environment, benefiting both buyers seeking a variety of options and sellers looking to make more strategic moves.

New presidential policies can influence the housing market through a variety of mechanisms, impacting factors like affordability and market stability.

For example, a new administration may introduce new regulations or modify existing ones related to real estate transactions, lending practices and property management.

Rates are another major consideration for buyers, and uncertainty about how far rates could decline has kept some buyers on the fence about entering the market. While election years typically do not have a major impact on rates, the general uncertainty stemming from the election combined with higher rates could keep some buyers out of the market.

Another example may be changes in policies. Vice President Kamala Harris and former President Donald Trump propose distinct plans to tackle housing supply and affordability:

• Homebuyer Assistance: Harris proposes up to $25,000 in down payment assistance for primarily first-generation homeowners, and Trump suggests promoting homeownership through unspecified tax incentives.
• Housing Supply: Trump supports easing regulatory barriers and utilizing federal land for housing. Harris aims to build 3 million affordable homes in four years, advocating for expanded tax credits for home builders and a $40 billion fund for local governments.
• Zoning Regulations: Both candidates recognize the impact zoning has on housing supply. Trump aims to ease environmental and permitting rules, having previously created a council focused on reducing housing development barriers, while Harris plans to streamline permitting processes and zoning reform.
• Housing Finance: Trump seeks to end the conservatorship of Fannie Mae and Freddie Mac, while Harris likely favors the current administration’s approach to promote homeownership through these entities.

Trusted, professional real estate agents play an essential role in navigating these complex market conditions – they can offer tailored advice and strategic insights based on current market data. Their deep understanding of market trends, pricing strategies and local conditions help clients make informed decisions. According to a recent RE/MAX survey conducted with Pollfish of Gen Z and Millennial first-time homebuyers, 90% of those polled confirmed they’re likely to work with an agent.  Their top reason for doing so is guidance through the process from start to finish when buying or selling.

For buyers, a real estate agent can help assess if it is the right time for them to make a purchase, considering personal circumstances and market conditions. This includes evaluating local and national factors such as interest rates, property availability and market trends. Real estate agents also negotiate on behalf of the client while walking them through the home-buying process and any specific regulations within their area.

For sellers, an agent can play a crucial role in helping them understand market dynamics and inventory levels to optimize the timing of a sale. For example, they can provide insights into how interest rates may affect demand and how to position the property to attract buyers. Agents conduct thorough market analyses to identify trends in pricing and demand, allowing sellers to strategically determine the best time to list their property.

By leveraging the knowledge and skills of a real estate professional, both buyers and sellers can better navigate the market with confidence.

The real estate market is constantly changing and evolving. Despite temporary disruptions that may arise during election cycles, home prices generally continue to rise year-after-year. While impactful in some ways, elections likely have minimal long-term effects on the trajectory of home prices. For those looking to buy or sell a home, focusing on personal financial readiness and individual needs is far more advantageous than trying to predict political developments or future policy changes.

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