With the 2024 Presidential election approaching, you might be wondering how this major event could affect your plans to buy or sell a home. It’s a valid concern since buying or selling a home is a significant decision. Historically, Presidential elections have had a minimal and temporary impact on the housing market. Here’s a closer look at how home sales, prices, and mortgage rates have behaved during election years, and why you can remain hopeful about your real estate goals.
Home Sales During Election Years
In November of election years, there is typically a slight slowdown in home sales. According to Ali Wolf, Chief Economist at Zonda, “Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.” This hesitation is due to the uncertainty surrounding the election, causing some people to delay their decisions.
However, this slowdown is temporary. Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows that after nine of the last eleven Presidential elections, home sales increased the following year. This pattern suggests that any decline in activity is short-lived, and the market quickly recovers (see graph below).
Home Prices and Election Years
When it comes to home prices, elections do not typically cause them to drop. Ryan Lundquist, a residential appraiser and housing analyst, states, “An election year doesn’t alter the price trend that is already happening in the market.” Historical data supports this, showing that home prices generally rise year-over-year, regardless of elections.
The latest data from NAR indicates that after seven of the last eight Presidential elections, home prices increased the following year. The only exception was during the housing market crash, which was an abnormal period. Today’s market is more stable, so you can be confident that your home’s value will likely continue to grow (see graph below).
Mortgage Rates and Elections
Mortgage rates play a crucial role in your monthly payments when buying a home. Looking back at the last eleven Presidential election years, data from Freddie Mac reveals that mortgage rates decreased from July to November in eight of those years. Most forecasts suggest that mortgage rates may ease slightly for the remainder of this year, following the trend of declining rates in previous election years. Lower rates mean lower monthly payments, which is good news for prospective buyers.
The Bigger Picture: Market Shifts and Opportunities
In a recent blog post, we discussed the dynamic nature of the real estate market and the gradual move towards balance, which offers new opportunities for buyers. The share of home sellers cutting prices has risen for the first time in over a year, signaling a potential advantage for buyers. This trend, combined with the elevated mortgage rates, suggests a market in flux but with promising signs for those prepared to make a move.
US Home Sellers Slash Prices Amid Market Shift
As of the four weeks ending May 26, about 6.4% of sellers reduced their property prices, the highest level since November 2022, according to Redfin. The median asking price dropped by $3,000 to about $417,000, marking the first deceleration in six months. Despite this, the median selling price jumped over 4% to a record high of $390,000, illustrating the market’s volatility.
Decreased demand is evident as properties now stay on the market for a median of 32 days, three days longer than a year ago. Redfin’s homebuying demand index also fell 12% annually and 7% compared to the previous month, hitting the lowest level in three months. Mortgage rates, influenced by the Federal Reserve’s rate hikes to combat inflation, have remained elevated above 7%, reminiscent of rates seen in 2002.
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What This Means for You
So, what’s the big takeaway? While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says, “Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.” For most buyers and sellers, elections don’t have a major impact on their plans.
Final Thoughts
While it’s natural to feel a bit uncertain during an election year, history shows the housing market remains strong and resilient. By implementing effective savings strategies and understanding the evolving real estate landscape, you can take advantage of new opportunities. Partner with Sell for 1 Percent Realtors to explore how our services can help you save and succeed in your homebuying journey.
For more insights on the real estate market, check out our previous blog post here. Stay informed and make the most of the changing market dynamics.
Bottom Line
Navigating the housing market during an election year can seem daunting, but historical trends show resilience and opportunities for buyers. For personalized guidance and to benefit from our 1% commission model, let’s connect. We’re here to help you achieve your real estate goals, election year or not.
