How do Presidential Elections Impact the Real Estate Market? - JUNE 2024

How do Presidential Elections Impact the Real Estate Market?

It’s a common remark every four years: “I may wait to buy/sell until after the elections.” It’s an understandable sentiment. Regardless of your political leanings, we all have some trepidation about the side we don’t support gaining power and making significant changes to our lives and, related, to the real estate market. But is this concern really justified?

The short answer is no.  Most data concludes that presidential elections do not have a marked influence on the real estate market. The real estate market tends to march to the beat of its own drum, and it is very resilient. This is not to say that changes in Washington will not usher in changes to the marketplace, but those changes are typically nominal and are unlikely to impact the overall status of the housing market.

To begin with, the government does not possess a lot of power over the real estate market. Laws regulating real estate have remained relatively stable and unchanged for decades now. Yes, we could see a change in mortgage interest rate deductions or property tax deductions. There may also be fluctuations in capital gains tax rates. But those changes are not usually significant, nor do they make a major difference in whether someone will buy or sell.

One could argue that an election year is actually good for the real estate market. The party in power benefits from a strong economy.  In fact, this is one of the most telling statistics leading into an election - if the economy is strong, it bodes well for the incumbent. Therefore, it would make sense for that party to do all that it can to help the real estate market along. This is one of the reasons we have been optimistic about an interest rate drop this year.  Ergo, it has not happened yet because the Fed seems to operate independently of the political party in control. If it can be influenced, one would expect some kind of rate drop in the coming months.

Certainly, the election year uncertainty weighs on the minds of buyers and sellers.  It is estimated that approximately 20% of would-be buyers or sellers sit on the sidelines until the votes have been cast. This results in a reduction of available properties and able purchasers. But it’s likely that those factions offset one another and do not influence the market in any telling manner.

It is possible that the real estate market and its continued softening are talking points as we approach November. The market, for the better part of the last decade has been very strong, particularly in Phoenix metro. If it becomes a more noticeable talking point, we may hear about policy change promises from either candidate that could impart change in the marketplace. Historically, however, this has not been the case and we can probably rest easily knowing that whoever is elected will not drastically change the housing market.