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As another presidential election nears, discussions about its impact on various aspects of life become more intense. One area often scrutinized is the real estate market. The common belief is that elections create uncertainty, causing potential homebuyers to hesitate. However, a closer examination of historical data and expert opinions reveals a different story.
Historical Perspective: Elections and Home Prices
Contrary to the popular notion that elections negatively affect the housing market, historical data suggests otherwise. Analyzing the S&P CoreLogic Case-Shiller Home Price Index shows that home price appreciation during election years often surpasses that of non-election years. Since 1987, home prices have increased by an average of 4.84% in election years compared to 4.44% in non-election years.
For example, in 2004, the housing market saw significant growth, with home values soaring by 13.4% despite it being an election year. Conversely, 2008 witnessed a drastic decline in home values, dropping by 12%, due to the global economic collapse rather than the presidential election.
What Drives Housing Prices?
The primary factors influencing home prices are the available housing supply, demand, and mortgage rates. These elements have a much greater impact than the political climate. Economist Lisa Sturtevant from Bright MLS emphasizes that the housing market’s performance is driven more by demographics and the broader economy than by the election cycle.
Economist Ken H. Johnson from Florida Atlantic University adds that no statistical evidence supports the notion that presidential election outcomes significantly affect home prices. Presidents’ roles in directly influencing the housing market are limited, as they do not control key aspects such as mortgage rates or housing supply.
The Overwhelming Influence of Economic Factors
Factors like housing starts, unemployment rates, and overall economic health play a more substantial 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 overshadow any potential impact from election results.
For instance, the COVID-19 pandemic led to a significant housing boom in 2021, with home values increasing by 18.9%. This surge was driven by record-low mortgage rates and increased housing demand, not by the political transition 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 has little direct effect on their income or financial stability. Therefore, making real estate decisions based on election outcomes is generally unnecessary. Unless your employment 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 personal financial readiness and market conditions rather than election results.
While presidential elections spark discussions and speculations about their impact on the real estate market, historical data and expert opinions indicate that the housing market’s performance is influenced more by economic fundamentals than by the political climate. Potential homebuyers and sellers should focus on key economic indicators and personal financial situations rather than the election cycle when making real estate decisions.
