As the U.S. anxiously awaits the outcome of the presidential election on Nov. 5, some of that anxiety is reportedly spilling over into the real estate market. For some buyers, the uncertainty of the outcome is proving to be too much to make a home-purchasing decision before knowing what the future holds.
Are election jitters really rocking the market? More importantly, is there a worrying trend at work here where the election outcome could derail the real estate market recovery we’ve been witnessing lately?
Election Anxiety and the Housing Market
Anecdotally, the election is giving many buyers pause. According to an article from Yahoo! Finance, seasoned real estate agents across the country are reporting clients are holding off making any decisions and not following up on leads until the winner is announced on Nov. 5.
Without a doubt, some of those jittery homebuyers are, in fact, first-time buyers waiting to see if Kamala Harris delivers on her promise of $25,000 down payment assistance. Others are hoping that the outcome may influence interest rates and/or home prices.
Of course, housing itself isn’t the only thing that buyers are worried about. The overall direction of the economy and how it will impact jobs and businesses is at the forefront of people’s thoughts. Businesspeople especially seem to be anxious this time around. As Louisiana-based real estate agent Crystal Bonin told Yahoo!, “People are like, ‘I need to see who wins to know how it’s going to affect me,’ especially my business owners.”
With tax restructuring proposals from both candidates and with each positioning themselves as a champion of small business owners, it’s no wonder that at least some people want to see how the promises and proposals will play out in reality.
While a slight slowdown in homebuying activity is considered normal during an election, this time, it seems like everyone is presumably more wary than usual.
And yet, the latest housing market figures we have point in the opposite direction.
The Housing Market Remains Strong—Jitters or No Jitters
According to the latest housing market update from Redfin, something remarkable is happening in the housing sector—and it’s pretty much the exact opposite of anecdotal evidence of hesitation among buyers. A key metric of homebuying demand, pending sales, is up 3.5% year over year during the four weeks ending Oct. 20.
Pending sales increased in 35 out of 50 metros, as examined by Redfin. The last time pending sales grew in that many metros was in May 2021, at the height of the post-pandemic moving frenzy. Redfin also says the number of home tours is strong for this time of year, which is also remarkable because it bucks the normal trend of a seasonal slowdown of activity.
Home sellers aren’t shying away from the real estate market, either. New home listings grew 2.2% year over year—a small increase, but an increase nonetheless. The median asking home price increased 6.1% year over year.
All of this is happening despite mortgage rates continuing a steady climb toward 6.44% as of Oct. 20, up from the two-year low of 6.08% at the end of September. Rising mortgage rates supposedly deter buyers more than other factors, but it seems that buyers just can’t or don’t want to wait for them to come down anymore.
Whichever way you cut it, the data isn’t showing a market spooked by the election. Even if buyers are worried about the election outcome, they’re getting on with it anyway.
Election anxiety may actually be a motivating factor for some people: They think housing will become even more unaffordable following the election, so they’re trying to get a home while they can. Others simply may have hit the election fatigue stage: They’ve seen/read it all and want to move on with their lives, regardless of what the election holds.
Will the Election Outcome Impact The Housing Market?
Some historical data points to a limited impact of elections on the housing market. Home sales typically go up in the year following an election: They did 9 times out of 11 since 1978, according to data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR).
House prices will likely go up too: They have done so in the year following seven out of the eight last presidential elections. The only time they didn’t was in the year following the 2008 financial crash.
Even mortgage rates aren’t especially affected by elections; if anything, they usually trend down in the following year. Basically, all this means we can expect a buoyant housing market regardless of the election outcome.
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Final Thoughts
All this means buyers and investors are right to be concerned about the election outcome, but they have nothing to worry about in terms of the election itself impacting the market in the next year or so.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
