How Will the Election Impact the Housing Market?

Election years often bring uncertainty to industries of all kids, and the housing market is no exception. If you’re a real estate agent, you should be prepared. Potential buyers and sellers may find themselves wondering how the upcoming election could impact their real estate decisions. Should they be worried about a market downturn or delay their plans?

Read on to discover what history tells us about the housing market during election years and whether their concerns are justified. Plus, arming yourself with this information can help you enter real estate relationships with confidence this fall.

Stats & Facts: What History Tells Us About the Market in Election Years

To understand how the housing market might respond to an election, it's helpful to look back at previous election years. Historically, the real estate market has experienced some fluctuations around election times, but these changes are typically temporary and not as drastic as many might fear.

For instance, it's common to see a slowdown in the market in the autumn every year, especially between October and November. According to data cited by David Childers, the housing market experienced a typical slowdown of around 9.8% during this period. This data was drawn between 1963 and 2019.

However, in election years, this slowdown is slightly more pronounced, with a dip of about 15%. This difference is often due to buyer and seller hesitation, as people may choose to wait until the election results are in before making major financial decisions. Only time will tell what will happen in 2024 with the election cycle, but agents shouldn’t be alarmed if they see slowdowns of about 15%.

So, Should You Worry?

Still, hesitation to buy or sell around the time of an election makes good sense, given the fact that interest rate hikes or drops are often tied to larger market factors. The Federal Reserve is supposed to be an apolitical body, but members are appointed by the sitting President and approved by the Senate. For this reason, it’s difficult to completely isolate interest rate decisions from market mood and election cycles.

Still, it’s important to note that this fall slowdown is usually temporary, whether it’s an election year or not. Sales that are delayed during the election period often pick up afterward and rejoin normal rates for that time of year.

As you’ve likely seen during your real estate career, the market tends to stabilize over time anyway. Lost real estate activity typically makes a comeback when social forces like recessions, pandemics, or political change have settled a bit. Best of all, the housing market has shown particular resilience amongst industries, with incremental improvements year over year, even during times of political change.

While it's natural to feel uncertain about the housing market during an election year, expert opinions suggest that the impact is usually less dramatic than many fear. The slight slowdown in activity around election time is often just a brief pause rather than a significant downturn.

It's also worth considering that various factors contribute to market conditions beyond just the election itself. Interest rates, economic performance, and housing supply and demand play significant roles in shaping the market. For example, even during an election year, favorable interest rates or a strong economy can help counterbalance any hesitancy caused by political uncertainty.

If you have concerned customers or prospects, you can certainly point them in the direction of this data for reassurance. You can also provide the data and make them feel comfortable with waiting by reassuring them that you will still be there to help with their purchase or sale after the election is over and the market settles. By showcasing your willingness to wait, it builds confidence in your trustworthiness as an agent.

Conclusion

While the uncertainty of an election year can cause some hesitation in the housing market, the impact is usually temporary. Historically, the market tends to experience a brief slowdown around election time, but this pause often gives way to a rebound in activity. By looking at past trends, we can see that the election's effect on the housing market is generally less dramatic than many might fear.

For real estate agents and their clients looking to navigate the market during these uncertain times, Breakthrough Broker offers a wealth of resources to stay informed and adapt to changing conditions. Check out Market Trends Video Creator and Market Snapshot Flyer to keep up with the latest market trends and make informed decisions.