With the next presidential election approaching fast, the campaign rhetoric isn’t the only thing heating up. Consumers across the country are feeling uncertain and overwhelmed, wondering whether it makes sense to buy or sell a home now or wait until after the election.
It’s a tense, emotional time for many. And while some might welcome the distraction a home purchase or sale would give them from all the pre-election drama, others are inclined to wait and see how the outcome could change their financial situation—or where they want to live.
You, as a real estate professional, need to know how to have these conversations with people:
- To shed light on how the housing market historically has reacted to election years
- To clarify today’s market conditions and what we can expect in the months to come
- To break down the benefits and risks involved in buying/selling now vs after the election
The more data and experience you can bring to bear to guide consumers and empower them to make smart decisions for themselves, the better off they’ll be in the long run, and the more likely they are to trust you as their guide when they’re ready to buy or sell.
Whoever wins the election, that’s one thing that won’t change.
Housing Markets in Election Years Past
So, how has the U.S. housing market reacted in election years past? Historically, the impact has been temporary but significant enough to deserve a mention in your conversations with buyers and homeowners in the weeks and months ahead.
Help your clients make informed, proactive decisions, and they’ll be better off for years to come. And so will your business.
To shed light on how the housing market has reacted to presidential elections—in the months leading up to November as well as the months that follow—we’ve rounded up data from top industry sources including:
- U.S. Department of Housing and Urban Development (HUD)
- National Association of Realtors (NAR)
- Realtor.com
- Bankrate
Read on for the big reveal.
Home Prices
Home prices have grown faster during past election years compared to non-election years. That’s according to a report on Bankrate, which draws from its analysis of Case-Shiller data.
In the nine election years we’ve had since 1987, home prices have increased an average 4.84% compared to an average 4.44% for non-election years. It’s a modest increase but one worth pointing out, if only to illustrate that home prices are unlikely to suffer during an election year.
It’s even tempting to think elections are a boon to home price appreciation. A closer look, however, shows the reality is more nuanced.
Home price appreciation by year from 1987 to 2023 (election years in bold font):
- 1987: 7.22%
- 1988: 7.23%
- 1989: 4.39%
- 1990: -0.69%
- 1991: -0.17%
- 1992: 0.82%
- 1993: 2.16%
- 1994: 2.52%
- 1995: 1.79%
- 1996: 2.43%
- 1997: 4.02%
- 1998: 6.44%
- 1999: 7.68%
- 2000: 9.29%
- 2001: 6.68%
- 2002: 9.56%
- 2003: 9.82%
- 2004: 13.64%
- 2005: 13.51%
- 2006: 1.73%
- 2007: -5.40%
- 2008: -12.00%
- 2009: -3.85%
- 2010: -4.11%
- 2011: -3.88%
- 2012: 6.44%
- 2013: 10.71%
- 2014: 4.51%
- 2015: 5.20%
- 2016: 5.31%
- 2017: 6.21%
- 2018: 4.52%
- 2019: 3.68%
- 2020: 10.43%
- 2021: 18.87%
- 2022: 5.65%
- 2023: 5.56%
The best and worst election years for the housing market had nothing to do with the election outcomes:
- Worst Year: 2008 — Home values plummeted 12% this year as the housing bubble of 2004–2007 finally burst. The resulting crash was due to terrible economic timing; the global economy was collapsing. This was the one year in the past few decades when home price growth was down from the year before (from -5.40% to -12.00%).
- Best Year: 2021 — Home values this year soared 18.9% amid record-low mortgage rates during the pandemic homebuying boom. None of that had anything to do with who won the election in November 2020.
Home Sales
Home prices aren’t the only thing affected by presidential elections.
The past several election years have brought a brief slowdown in home sales during the month of November. According to Ali Wolf, Chief Economist at Zonda, home sales are generally normal for most of the election year—with the exception of November when sales slow down a tick.
The hesitation is understandable, given the tension many are feeling around Election Day.
That said, the effect is temporary. Historically, home sales have bounced back in December and continued climbing in the months ahead. Data from both the U.S. Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) show that in nine of the past 11 presidential elections, home sales increased in the following year.
Mortgage Rates
While the lock-in effect may be losing its grip on the market, prospective buyers looking to finance their home purchase are generally motivated to secure the lowest possible mortgage rate. The higher the rate, the more they can expect their monthly payment to be.
So, how do rates react to presidential elections—if they react at all?
Based on data from Freddie Mac, in eight of the past 11 election years, mortgage rates have declined from July to November. And if the most recent forecasts are correct, rates are expected to ease in the months following the election as well.
The caveat, here, is that the lower rates go, the more likely buyers are to encounter competition when they reenter the market and start shopping for homes.
Buyers waiting for rates to drop below 6% need to know the potential risks of doing so.
Lower rates can help bring down monthly payments if prices remain as they are. But an increase in buyer demand will likely drive home prices up, especially as housing supply remains below pre-pandemic levels.
While most presidential candidates will do their best to sell the idea that they (and only they) can bring about a positive change in the American lifestyle, economists agree they have minimal influence on the housing sector.
The main concern for buyers and sellers right now is whether they can get the best outcome with a home purchase or sale before November 5th as opposed to afterward.
Knowing how past elections have impacted the market makes it easier to decide whether to forge ahead or press pause. You can give them that clarity—along with every other reason to trust that you’ve got their best interests at heart.
How to Share This Info with Consumers
We’re all about giving you the tools to become the front-and-center voice in your community.
By far the easiest way to share data like this with your database and social media followers is using done-for-you templates like the ones we create every week for BAMx members.
Every week, BAMx in a Box arrives by email with a new set of consumer-friendly templates for social media posts, video scripts, an email, and a blog. These templates alone make BAMx membership well worth the price by saving you hours of precious time every week.
Last week’s bundle included templates for a blog, email, and social media post sharing the data in this post. Because our goal for every weekly BAMx in a Box is to provide timely and easily digestible content your audience will love and want to share with others.
Take a look at the sampling below. Then come visit us on BAMx to learn more.
