How Will the Presidential Election Impact Real Estate?

by | Sep 2, 2020 | Leisure Village

The year 2020 will be remembered as one of the most challenging times of our lives. A worldwide pandemic, a recession causing historic unemployment, and a level of social unrest perhaps never seen before have all changed the way we live. Only the real estate market seems to be unaffected, as a new forecast projects there may be more homes purchased this year than last year.

As we come to the end of this tumultuous year, we are preparing for perhaps the most contentious presidential election of the century. Today, it is important to look at the impact past presidential election years have had on the real estate market.

Is there typically a drop-off in home sales during a presidential election year?

BTIG, a research and analysis company, looked at new home sales from 1963 through 2019 in their report titled One House, Two House, Red House, Blue House. They noted that in non-presidential years, there is a -9.8% decrease in November compared to October. This is the normal seasonality of the market, with a slowdown in activity that is usually seen in fall and winter. However, it also revealed that in presidential election years, the typical drop increases to -15%. But these sales are not typically lost forever, just delayed until after the election.

Will it matter who is elected?

To some degree, but not in the overall number of home sales. As mentioned above, consumer confidence plays a significant role in the desire to buy a home. How may consumer confidence impact the housing market post-election? The BTIG report covered that as well: “A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.” Overall sales should not be impacted in a significant way.

If mortgage rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market should remain strong up to and past the election.