Can the Presidential Election Affect the Housing Market?

The current presidential election is definitely an interesting one, capturing the attention of not just Americans, but people across the globe. We’re still quite a ways away from November when the 58th Presidential Election Day takes place on the 8th, which means things are only going to get even more heated.

But as fascinating as it is, what’s also intriguing is how such an election can affect other facets in the country, including the housing market.

So how and why would the election have such an impact?

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Presidential Elections and the Economy

Presidential elections tend to reflect the underlying mood of the economy, and essentially consumer confidence. History has shown that voters tend to be much more confident and optimistic in a robust economy, which drives consumer spending along with restored enthusiasm for housing. Homeowners and homeowner-hopefuls zealously enter the market with the notion that the American Dream is alive and kicking, which helps spike property values as returning politicians head back to office.

The opposite is also true. When the economy is struggling, consumer confidence nosedives. This, in turn, puts pressure on consumer spending, sending housing prices right down with it.

It’s happened throughout history, and it’s well-documented. Studies have even been conducted on the effect that presidential elections have on the economy and the housing market. The British Journal of Political Science published a paper in 2014 which details the observation of home sale and price trends during elections. The study involved analysis of data from 1999 to 2006 during 73 of those elections. What they discovered was that the price of homes dropped two- to three-tenths of a percentage point.

Other studies discovered similar findings. In 2012, Movoto.com showed that the housing market was affected by presidential elections using data from the California Realtors Association (CAR). They found that housing prices increased 1.5% less than in the year right before the elections, and 0.8% less than in the year right after the election. This might not seem like a lot, but little differences like these can really add up with time. The year of a presidential election could realistically cause property values to decline.

Elections Effect Consumer Confidence

Two different studies, same conclusion. Consumers look as if their confidence lacks when they’re in the midst doubt during these elections. Basically, consumers aren’t comfortable enough with the economy’s strength to make such a huge purchase. It’s not hard to accept the fact that when the economy is somewhat weak, as it is now, it directly mirrors consumer confidence.

Elections place a lot of weight on the shoulders of consumers who may have been in the market to buy a home. Every president that steps into office might have very different policies on housing and mortgages that could potentially impact buyers. Consumers are concerned about such effects, and many would simply rather wait it out and buy only when they feel certain that politics have stabilized.

Until then, and until the economy shows major signs of strength and stability, consumers just aren’t as apt to making a massive financial decision such as a home purchase. They’d much rather wait until all the uncertainties blow over, including who is elected to head the country. And the fact that the race is such a tight one so far this year means the uncertainty is even more prominent.

How Does This Affect Buyers and Sellers?

Experts anticipate housing prices to increase by about 3% this year, which is lower compared to recent years past. It’s highly possible that such speculation is related to the fact that a presidential election is looming. Some say that anyone willing to accept added risk might be able to snag a good deal on a home purchase. Others say it could take longer for sellers to find the right buyer, and recommend that sellers either sell the year before or after the election to take advantage of slightly higher property values.

Either way, it’s important to pay close attention to the market, regardless of whether there’s an election or not, before buying or selling. Everyone’s specific financial situation is different, and by working with a real estate agent and mortgage broker, you’ll be in a much better position to make a sound buying or selling decision.