How Presidential Elections Affect the Housing Market
With each presidential election, there’s a familiar level of uncertainty in the air. Many potential homebuyers and sellers wonder, “Should I put my plans on hold until things settle down?” This question is understandable and on the minds of many Americans, as big events like elections often make us question whether it’s the right time to make a major move. But here’s the inside scoop: historically, presidential elections have a relatively minor and temporary impact on the housing market.
In this article, we’ll break down how presidential elections affect the housing market, home sales, prices, and mortgage rates, helping you understand what to expect and how to plan your next steps. And, if you’re interested in a deeper dive, check out the video Scott and Lane from Sackin-Stone Team put together during the election 4 years ago—they’ve got great insights and a bit of fun as well. Get into it!
https://youtu.be/_p0DfuQ4wcw?si=6ws4-T4dVodwjygT
Do Presidential Elections Affect the Housing Market?
The Election Effect on Housing: Fact vs. Fiction
Every four years, the housing market sees a bit of added caution as voters anticipate the outcome of the presidential election. People fear that a new administration might bring drastic policy changes, impacting their financial stability. However, while these fears are natural, the data suggests that the “election effect” on housing is typically mild and short-lived. Here’s why:
• Psychological Impact: Elections create a sense of uncertainty, which can lead to hesitation among buyers and sellers. However, it’s often more perception than reality.
• Historical Trends: The housing market, much like the stock market, is resilient and driven more by long-term economic indicators than by the immediate results of an election.
While it’s natural to feel cautious, remember that most election-induced changes are temporary, and the housing market tends to recover quickly.
Do Home Sales Slow Down During Election Years?
The Seasonal Dip in Home Sales During Elections
If you’re an active buyer or seller, you might have noticed a slight lull in the housing market as election day approached. This dip usually happens in the month or two leading up to an election, as people adopt a “wait-and-see” approach. But here’s the good news—it’s a temporary drop, and sales typically bounce back afterward.
According to data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR):
• 9 out of the last 11 elections saw home sales increase in the year following the election.
• In October and November of election years, home sales tend to experience a small dip. This dip is generally around -15% compared to a typical non-election year’s dip of around -9.8%. Today, we’re down about 17% in overall home sales over the past 6 months in Orange County.
Here’s why this happens:
1. Uncertainty: Buyers and sellers tend to hit pause on major decisions when the political landscape is unclear.
2. Media Influence: Election news dominates the media, distracting people from the housing market.
3. Seasonal Patterns: The fall season naturally sees a slowdown in sales, and the election can amplify this trend.
After the election, the data shows that sales activity generally resumes, so if you’re planning to buy or sell, rest assured that the post-election market often presents good opportunities.
What Happens to Home Prices in Election Years?
Are Home Prices Impacted by Election Years?
One of the biggest concerns for homeowners is whether their property’s value might drop in an election year, or after for that matter. But here’s some reassurance: election years have historically shown minimal impact on home prices. According to housing analyst Ryan Lundquist, “An election year doesn’t alter the price trend that is already happening in the market.” In simpler terms, home prices typically keep doing what they were doing before the election. The median sales price for a single-family detached home in Orange County is up about 13% year to date. But take a look below at what the historical data shows.
Data shows that:
• 7 out of the last 8 elections resulted in higher home prices in the following year.
• The only exception was in 2008, but that was largely due to the global financial crisis, not the election itself.
Let’s take a closer look at recent election years to understand this trend better:
1. 1992: Home prices rose from $105,500 to $109,100 in 1993.
2. 2000: Prices jumped from $147,300 to $156,600 in 2001.
3. 2008: Prices did drop slightly, but this was the height of the financial crisis, an unusual event unrelated to the election.
What’s the takeaway here? Unless there’s a major economic disruption, home prices tend to follow their pre-existing trajectory, regardless of who wins the election.
Do Mortgage Rates Drop During Election Years?
How Mortgage Rates Respond in Election Years
Good news for buyers: mortgage rates often see a slight decrease in the months leading up to an election. This trend can give prospective homebuyers a bit of relief and potentially boost purchasing power.
Freddie Mac data shows that:
• In 8 out of the last 11 election years, mortgage rates dropped between July and November.
• This trend provides a small window for buyers to lock in slightly lower rates if they choose to purchase during an election year.
For example, let’s look at some past election years:
• 1984: Mortgage rates dropped from 14.67% to 13.64%, giving buyers a bit of extra room to stretch their budget.
• 2000: Rates fell from 8.15% to 7.75%, once again creating favorable conditions for buyers.
• 2020: Rates dropped from 3.02% to 2.77%, a record low that prompted a wave of refinancing and buying activity.
In 2024, we’re seeing a similar trend. Rates topped out at 7.80% for the 30-year fixed mortgage in Q4 of 2023 but have eased slightly and currently sit at 7.04% (on 2024 election day). This trend could continue, giving buyers a small but meaningful advantage.
Key Takeaways for Buyers and Sellers
Is It a Good Time to Buy or Sell During an Election Year?
If you’re wondering whether you should hit pause on your real estate plans because of an election, here’s some clarity. The data and trends indicate that presidential elections don’t dramatically impact the housing market. Here’s a quick rundown for both buyers and sellers:
For Buyers:
• Mortgage Rates Expected to Dip: Election years often see slight decreases in mortgage rates, the Fed have announced future rate cuts, and all indications are lower rates for 2025.
• Prices Remain Stable or Rise: Home prices generally hold steady or increase, so waiting won’t necessarily save you money. In fact, the Spring following an election year has been typically that president’s best year for real estate in that 4-year term.
• Competition May Be Less Intense: The temporary dip in buyer activity could mean less competition, giving you a better chance to find a good deal. The cooling demand won’t last for long. Q1 in 2025 is expected to bring in more demand.
For Sellers:
• Small, Temporary Sales Dip: We noticed a slight drop in activity here in OC leading up to the election, but it’s typically short-lived. Expect sales to increase in 2025. Experts are indicating 12.5%+ growth for 2025.
• Prices Tend to Climb Post-Election: If you choose to sell right after the election, you may benefit from increased buyer activity and stable or rising prices.
• Focus on Market Trends, Not Election Results: The housing market’s resilience means that it will continue to be influenced by broader economic factors, not just who wins the White House.
Whether you’re buying or selling, there’s no need to let the election freeze your plans. By understanding the historical trends, you can make an informed decision that works best for your needs.
Bottom Line: Stay Calm and Plan Your Move
Presidential elections can create a lot of noise, especially this one, but they don’t usually have a major impact on the housing market. Buyers can benefit from slightly lower mortgage rates, while sellers may experience only a brief pause in buyer activity. According to Lisa Sturtevant, “Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”
In other words, if you’re considering buying or selling a home, there’s no need to put your plans on hold just because it’s an election year. Focus on your long-term goals, monitor key economic indicators like mortgage rates and employment, and move forward with confidence.
Still have questions? The Sackin-Stone Team is here to help you navigate the market, whether it’s an election year or not. Reach out to us today to discuss your unique needs and how we can help you achieve your real estate goals.
By addressing each concern buyers and sellers may have, this article aims to reassure readers that the election’s impact on the housing market is minimal. With data, historical trends, and expert insights, you can move forward with your plans, confident in the resilience of the housing market.
