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Election Year Myth: Why Presidential Races May Not Sway the Real Estate Market

Election Year Myth: Why Presidential Races May Not Sway the Real Estate Market

Election Year Myth: Why Presidential Races Don’t Sway the Real Estate Market

The Election Year Myth: Why Presidential Races Don’t Sway the Real Estate Market

As the presidential election looms, discussions about its potential impact on various aspects of life gain momentum. Among these, the real estate market often becomes a focal point of debate. There’s a prevalent belief that elections create uncertainty, leading potential homebuyers to hold off. Some buyers are less likely not to purchase close to the election months in anticipation of who will become President.

Historical Perspective: Elections and Home Prices

Contrary to the notion that elections adversely affect the housing market, historical data suggests otherwise. The S&P CoreLogic Case-Shiller Home Price Index reveals that home price appreciation during election years often surpasses that of non-election years. Since 1987, home prices have increased by an average of 4.84% in election years compared to 4.44% in non-election years.

For example, in 2004, despite being an election year, the housing market experienced significant growth, with home values rising by 13.4%. In contrast, the sharp decline in home values in 2008, a drop of 12%, was due to the global economic crisis rather than the presidential election.

What Drives Housing Prices?

The main drivers of home prices are the available housing supply, demand, and mortgage rates—factors far more influential than the political climate. Lisa Sturtevant, an economist at Bright MLS, emphasizes that the housing market’s performance is more about demographics and the broader economy than the election cycle.

Ken H. Johnson, an economist from Florida Atlantic University, supports this view, noting that there is no statistical evidence linking presidential election outcomes to significant changes in home prices. Presidents cannot control key aspects such as mortgage rates or housing supply.

The Overwhelming Influence of Economic Factors

Economic indicators such as housing starts, unemployment rates, and overall financial health significantly impact the housing market more than presidential elections. Michael Seiler, a housing economist at the College of William & Mary, argues that these economic factors overshadow any potential impact from election results.

For instance, the COVID-19 pandemic led to a housing boom in 2021, with home values increasing by 18.9%. This surge was driven by record-low mortgage rates and increased housing demand, not the political transition to Joe Biden’s administration.

Should You Buy or Sell a House During an Election Year?

For most Americans, the outcome of a presidential election has little direct effect on their income or financial stability. Therefore, basing real estate decisions on election outcomes is generally unnecessary. Unless your job is directly influenced by federal policies that might change with a new administration, your decision to buy or sell a home should depend on your financial readiness and current market conditions rather than election results.

Conclusion

While presidential elections stir discussions and speculations about their impact on the real estate market, historical data and expert opinions indicate that economic fundamentals play a much more significant role in shaping the housing market’s performance. Potential homebuyers and sellers should focus on key economic indicators and their financial situations rather than the election cycle when making real estate decisions.

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