Understanding the Impact of Elections on the Real Estate Market

As we navigate through the complexities of the real estate market, one question frequently arises: how do elections affect this landscape? With numerous factors at play, including market trends, buyer sentiment, and economic indicators, the influence of elections is a topic worth exploring. In this post, we will delve into how elections can shape home sales, prices, and mortgage rates, providing insights to help buyers, sellers, and investors make informed decisions.

The Current Landscape: Certainty in Uncertain Times

In a world filled with unpredictability, the recent election has provided a much-needed sense of certainty. Regardless of political affiliation, the conclusion of the election means that buyers and sellers can make decisions with a clearer understanding of the market direction. This newfound certainty is expected to lead to increased activity in real estate transactions.

Historically, the real estate market has faced challenges, particularly since June 2022, when it entered what many are calling a transaction recession. This doesn’t mean that home prices are dropping; rather, the number of transactions has significantly decreased. Experts predict that 2025 will witness a resurgence, with an anticipated increase in transactions by 12-13% as the market stabilizes post-election.

Sales Trends During Election Years

A common inquiry is whether elections slow down the housing market. Generally, from October to November, home sales do see a decline, with a typical drop of about 9.8% in a non-election year. During an election year, this slowdown can be more pronounced, with a decrease of about 15%. This trend can create a palpable pause in the market as many potential buyers hold off on making decisions until after the election results are in.

Interestingly, a survey indicated that 23% of first-time homebuyers were waiting for the election results before making a purchase. This illustrates how elections can create a temporary freeze in activity, but it’s crucial to note that this pause is not permanent. Historically, home sales tend to bounce back robustly after elections, with 82% of elections resulting in an increase in transactions the following year.

The Post-Election Surge

After elections, there is often a surge in home sales. The pent-up demand that builds during the election cycle usually leads to a significant increase in transactions. For instance, during the 2024 election, experts forecast that residential sales, encompassing both new construction and resales, could rise from 4.6 million to 5.2 million in 2025. This rebound reflects the market's ability to recover from the temporary slowdown, confirming that while elections may create hesitation, they also foster a release of pent-up demand.

Mortgage Rates and Elections

Another critical aspect to consider is how mortgage rates fluctuate during election years. Historically, mortgage rates have decreased from July to November in 72% of election years. This year has been no exception, with rates experiencing some volatility but remaining below last year's levels, which were over 8%. Today, rates hover around 6.8% to 7%, reflecting a more favorable environment for buyers.

As mortgage rates continue to stabilize, potential homebuyers may find this to be an opportune moment to enter the market. Lower rates can enhance purchasing power, making it easier for buyers to secure homes that meet their needs.

Home Prices Post-Election

One of the most pressing concerns for buyers and sellers alike is the impact of elections on home prices. Historically, home prices have risen 88% of the time in the year following an election. This trend can be attributed to the increased demand that follows the post-election bounce-back in transactions.

In 2024, national home prices are projected to rise by an average of 2.5%. However, this figure can vary depending on local market conditions. Areas with tight inventory may see more significant price increases, while markets with increased supply could experience more stability or even slight declines.

Preparing for the Future

As we look ahead, it’s essential for buyers and sellers to remain informed and prepared. The post-election period is likely to bring increased activity, and understanding the dynamics of the market can help individuals navigate this landscape effectively.

For those considering buying, now might be the ideal time to act. With more inventory becoming available and the potential for further interest rate decreases, securing a property that meets your criteria could be a wise decision.

Conclusion: A Market in Motion

In summary, while elections do influence the real estate market, the effects are often temporary and can lead to significant opportunities for buyers and sellers. Understanding these trends can empower individuals to make informed decisions as they navigate the complexities of the housing market.

As always, staying informed about market conditions and trends is crucial. Whether you’re looking to buy, sell, or invest, having a knowledgeable team by your side can make all the difference. If you have any questions or need assistance, don’t hesitate to reach out for expert guidance.