The Effects Of An Election Year On Real Estate Purchasing

How Does The Presidential Election Impact Real Estate

As a practicing real estate agent, it isn't uncommon to receive multiple different reasons as to why someone is looking to purchase a house, whether it is a primary residence or investment home. A few reasons can range anywhere from, a first home, a retirement home, vacation or for investors - an income producing property. Today, a relatively primary asset can double over as an investment property by utilizing vacation rental platforms like Airbnb.

While it's easy to hear the many reasons to purchase, there are just as many reasons given why someone may not be interested in purchasing - simply not interested, does not believe they can afford it, the economy and a surprisingly common one as well is ‘it’s an election year’.

The latter typically refers to the presidential election year, or as sometimes mentioned, a change of power. An election year often introduces uncertainty and anticipation across various sectors, including real estate. While this time is extremely significant for the country and can impact the economy, is it plausible enough to believe that the presidential election year can significantly affect a real estate purchase.

‍Economic Factors Play A Part

The time leading up to the presidential election is usually filled with campaigning from both parties, rolling out their plans and promises for the American people. Always included in those plans and promises are strategies for how they feel they can make an economic impact for the betterment of the nation. Considering this, those proposed ergonomic policies can influence the market. A couple of examples include:

• Interest Rates: The Federal Reserve, influenced by the broader economic climate, might adjust interest rates, affecting mortgage rates. Historically, if there is uncertainty about the economic future, interest rates might remain low to encourage borrowing and investment.
• Tax Policies: Changes in property tax laws, capital gains taxes, or tax incentives for homeowners can also impact purchasing decisions. Buyers may delay or expedite purchases based on anticipated tax changes.

Government spending generally translates as seeing a shift in the increased resources available federally, which can trickle down to localized economies. Increased spending on infrastructure or social programs can boost local economies, making real estate investments more attractive.

Market Psychology Is A Thing

Market trends based on the consumer response to the state of the economy is often influenced by market psychology, simply whether it's an election year, the summer, or any other time. The buyer, seller and the industry experts in which they consult before deciding to move forward with their decision also play a key role.

Elections often bring uncertainty, which can lead to market volatility. This uncertainty can cause buyers and sellers to adopt a wait-and-see approach, potentially slowing down the market. Key psychological impacts include:

• Buyer Hesitation: Potential buyers may delay purchases until after the election, seeking a clearer understanding of future economic policies.
• Seller Reluctance: Similarly, sellers might wait, anticipating potential increases in property values post-election.

All in all, the political climate affects consumer confidence. High consumer confidence generally encourages real estate transactions, while low confidence can have the opposite effect. The perception of economic stability and future growth prospects, influenced by election outcomes, plays a crucial role in shaping consumer confidence.

Historical Trends Helps Predict The Future

If there was a guess to be made, the idea that buying or selling in the market is not necessarily based on specific major events that actually had an adverse effect, but rather based on the pattern of reduced activity on the market leading up to an election and then a rebound after the uncertainty has passed.

Over the long term, election cycles generally have a minor impact compared to fundamental market drivers like interest rates, employment levels, and demographic trends. While election years may see temporary fluctuations, they do not significantly alter long-term real estate market trajectories. To be more direct, when factoring in elections and the real estate market, the likelihood of significant shifts, it's more beneficial to plug into local elections as they can be more market specific through factors such as local zoning laws, property taxes and other local economic factors.

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NREMG Can Help You Maneuver The Market With Strategy

It's quite understandable why a major event such as the presidential election would concern a buyer or seller. However, education is the basis of a well-informed decision. National Real Estate Management Group helps our clients strategize for success. We monitor mortgage rates and their trends, along with staying up to date on the local policies and changing laws. We also analyze and observe the timing of the market to help prepare our clients for flexibility and can provide the best opportunity to align in favor of their goals and the current economic policies and market positioning.

Are you looking to buy or sell in the current market or future? Talk strategy with NREMG and let’s prepare for your success.