What Effect will the 2020 Election Have on the Real Estate Market?

Dated: September 2 2020

Views: 120

How Will the Presidential Election Impact Real Estate?

How Will the Presidential Election Impact Real Estate? | MyKCM

The year 2020 will be remembered as one of the most challenging times of our lives. A worldwide pandemic, a recession causing historic unemployment, and a level of social unrest perhaps never seen before have all changed the way we live. Only the real estate market seems to be unaffected, as a new forecast projects there may be more homes purchased this year than last year.

As we come to the end of this tumultuous year, we’re preparing for perhaps the most contentious presidential election of the century. Today, it’s important to look at the impact past presidential election years have had on the real estate market.

Is there a drop-off in home sales during a presidential election year?

BTIG, a research and analysis company, looked at new home sales from 1963 through 2019 in their report titled One House, Two House, Red House, Blue House. They noted that in non-presidential years, there is a -9.8% decrease in November compared to October. This is the normal seasonality of the market, with a slowdown in activity that’s usually seen in fall and winter.

However, it also revealed that in presidential election years, the typical drop increases to -15%. The report explains why:

“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.”

Are those sales lost forever?

No. BTIG determined:

“This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”

In a separate study done by Meyers Research & Zonda, Ali Wolf, Chief Economist, agrees that those purchases are just delayed until after the election:

“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year.”

Will it matter who is elected?

To some degree, but not in the overall number of home sales. As mentioned above, consumer confidence plays a significant role in a family’s desire to buy a home. How may consumer confidence impact the housing market post-election? The BTIG report covered that as well:

“A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.”

Again, overall sales should not be impacted in a significant way.

Bottom Line

If mortgage rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market should remain strong up to and past the election.

Blog author image

Robin Muehlhauser - DRE#01460839

Specialties: Buyer's Agent, Listing Agent, Relocation, Consulting My team's passion is making your Real Estate goals a reality. We take the time to meet with our customers to understand their wants a....

Latest Blog Posts

The Current Real Estate Market Needs New Sellers

Homebuyer Demand Is Far Above Last Year’s PaceHomebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June and July. Buyers are

Read More

What Effect will the 2020 Election Have on the Real Estate Market?

How Will the Presidential Election Impact Real Estate?The year 2020 will be remembered as one of the most challenging times of our lives. A worldwide pandemic, a recession causing historic

Read More

Get a Pre-Approval for Buying a House in a Hectic Market

Why Is It so Important to Be Pre-Approved in the Homebuying Process?You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When

Read More

Why You Should Move to the Greater Sacramento Area

The Bay and Los Angeles are so expensive, yet they seem to get more and more crowded every day. You’re working from home anyway, and you’re planning on holding on to that when it’s

Read More