As the election coverage heats up leading up to November 8, many are asking about the impact of buying or selling during an election year. Since some of my clients wanted to know what effects this will have on real estate, I thought I should do some research. No matter which candidate your rooting for, here is what you can typically expect in the housing market during an election year.
When Buying and Selling During an Election Year, Consider This…
- Using historical data from the California Association of Realtors, Movato reported that housing prices rose by 6% the year before, 4.5% the year of, and 5.3% the year after an election. This should provide some relief that the market isn’t going to fall off a cliff. But it does grow a bit slower, on average, until after the new President takes office.
- The difference in home price appreciation during an election year is about 2% or $8,000 vs $12,000 on a $200,000 home.
- Redfin chief economist Nela Richardson was recently quoted by a well known Forbes contributor saying, “While homeowner anxiety over the election is clearly mounting, the likelihood of an immediate shock to the market is slim.”
- Policies the new President may institute will take time before they are felt in the market.
- In such a close election, homeowners and prospective home owners are cautious. A savvy buyer can leverage this and make a great deal for themselves.
- As Warren Buffet once said, “Be fearful when others are greedy and greedy when others are fearful.”
- Real estate market fluctuations have traditionally been microeconomic events vs macroeconomic. Events like a presidential election definitely impact things on a larger scale. That being said, in our cities and neighborhoods, real estate prices have been dictated by supply and demand and will continue to be before, during and after the election.
Final Thoughts on Buying or Selling During an Election Year
The real estate statistics commonly referenced during election years must be considered in context. If you are ready to sell or buy and have aligned all the other parameters, then is a possible 1-2% growth difference a really big deal? In my opinion, no.
The bigger issue to consider now may be the low interest rates currently in place. In fact, the federal reserve had a plan to raise rates four times in 2016, and it hasn’t happened yet. With the new President in 2017, the federal reserve may decide to make up for lost time. A percentage point on a 30-year loan is likely enough of a benefit to overcome a year’s worth of reduced appreciation on your new home.
Whether you decide to wait out the storm or move forward in the market now, I am always here to help.
Do you have any questions or comments for me? Let me know in the comments.