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As another presidential election approaches, debates intensify about its effects on various aspects of our lives. A common belief about the real estate market is that elections create uncertainty, causing potential homebuyers to hesitate. However, a closer look at historical data and expert opinions reveals a different narrative.
Historical Perspective: Elections and Home Prices
Contrary to the popular belief that elections hurt the housing market, the historical data suggests otherwise. When looking at the S&P CoreLogic Case-Shiller Home Price Index, home prices often rise more in election years than in non-election years. Since 1987, home prices have increased by an average of 4.84% during election years compared to 4.44% in non-election years.
For example, the housing market grew significantly in 2004, with home values jumping by 13.4% despite it being an election year. On the other hand, home values dropped by 12% in 2008, but this was due to the global economic collapse, not the presidential election.
What Drives Housing Prices?
The main factors influencing home prices are housing supply, demand, and mortgage rates. These are far more important than the political climate. According to Economist Lisa Sturtevant from Bright MLS, the housing market is more about demographics and the broader economy than the election cycle.
Additionally, Economist Ken H. Johnson from Florida Atlantic University adds that there’s no statistical evidence showing presidential election outcomes significantly affect home prices.
The bottom line is that presidents don’t directly control key aspects like mortgage rates or housing supply.
The Overwhelming Influence of Economic Factors
Factors like housing starts, unemployment rates, and overall economic health play a more significant role in shaping the housing market than the presidential election. Michael Seiler, a housing economist at the College of William & Mary, argues that these economic indicators are more important than election results.
For example, the COVID-19 pandemic led to a big housing boom in 2021, with home values rising by 18.9%. This surge was driven by record-low mortgage rates and increased housing demand, not the political change 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 doesn’t directly affect their income or financial stability. Therefore, making real estate decisions based on election outcomes isn’t necessary.
Unless your job is directly tied to federal policies that might change with a new administration, your decision to buy or sell a home should be based on your financial readiness and market conditions, not the election.
Conclusion
While presidential elections create discussions about their impact on the real estate market, historical data, and expert opinions show that the housing market’s performance is more influenced by economic fundamentals than the political climate.
Potential homebuyers and sellers should make real estate decisions based on key economic indicators and their financial situations rather than the election cycle.
