As the U.S. gears up for the 2024 presidential election, many homebuyers are holding off on major purchasing decisions, with uncertainty about the election’s impact on the housing market adding to an already challenging landscape. Although the election’s outcome won’t likely bring an immediate shift in home prices or mortgage rates, it has left some buyers cautious. This article delves into why buyers are waiting on the sidelines and what the market can expect once the election dust settles.
Highlights of the Pre-Election Market
- Waiting Game for Buyers: Many buyers are delaying decisions until post-election, waiting to see how potential new policies could influence housing costs and affordability.
- Historic Trends Show Post-Election Bumps: Analysis of previous elections indicates a pattern where home sales and prices tend to rise in the months following an election, regardless of the outcome.
- Polarized Market Views: Some buyers speculate that Trump will lower mortgage rates, while others hope Harris could introduce a down-payment subsidy, leading to divided buyer expectations.
The Impact of Election Uncertainty on Homebuying
Home purchases have reached a 14-year low, with sales of existing homes falling even as mortgage rates eased in September. National Association of Realtors (NAR) Chief Economist Lawrence Yun suggests that buyers may be delaying purchases due to the polarized political climate, waiting to see if the election outcome will provide a more predictable environment for such a significant financial commitment.
In areas across the country, real estate agents report that potential buyers are discussing the election’s possible impact on the market. Some, particularly in politically divided regions, are hoping for specific candidate-driven policies that may not come to fruition. For example, some buyers believe that a Trump victory could bring lower interest rates, while first-time buyers are drawn to Harris’ proposed down-payment subsidy. However, these expectations may be overestimated, as mortgage rates aren’t directly controlled by the president and most campaign promises would require legislative support to materialize.
Election Years and Market Trends: What History Tells Us
Historically, elections don’t tend to impact home prices or sales before the vote directly. Realtor.com’s economic data reveals that out of the past five presidential elections, only two (2004 and 2016) saw a decrease in sales and home price growth in the four months leading up to the vote. However, the data consistently shows an increase in sales and price growth in the months immediately following elections, with notable post-election surges in 2016 and 2020.
On average, home sales have increased by 7% in the four months after past elections, with prices seeing a 5% rise. This post-election trend indicates that while pre-election jitters may slow buyer activity, the market typically recovers and gains momentum once the uncertainty has lifted. The one exception was in 2008, during the Great Recession, which disrupted normal market patterns.
Buyer Sentiment and the “Smoke Screen” Effect
Election-related anxieties, according to some agents, may be more of a “smoke screen” than a decisive factor in homebuying. Sarasota, FL, agent David Zarghami observes that some buyers who claim to be waiting for the election results may actually be using it as a convenient reason to delay. For example, Zarghami recalls a potential buyer who said he’d purchase a high-end property if his favored candidate won but would abandon the idea if the opposing candidate won. While many buyers might express strong opinions about the election, other factors such as economic volatility and personal finances likely play a larger role in their decision to wait.
Colorado agent Andrew Fortune also sees a mixed response among clients, with some buyers placing too much emphasis on the election’s impact. “People tend to think short-term during election seasons,” says Fortune, “but real estate markets don’t shift overnight based on election results alone. The economy moves based on policies over time, not just on who wins or loses.”
Looking Forward: Will Buyers Come Off the Sidelines?
The 2024 election has heightened buyer sensitivity, but experts agree that broader economic factors, such as interest rates and supply and demand dynamics, will ultimately drive the housing market. The Federal Reserve’s stance on rate hikes, economic stability, and local market conditions will remain more influential than any single election.
In the months following the election, buyers and sellers who paused their plans will likely re-enter the market, contributing to the “post-election bump” that historically follows presidential elections. For prospective buyers who have been hesitant, this may bring a fresh surge in activity as political concerns fade, and they return to focus on long-term financial goals.
Conclusion: The Election’s Lasting Impact on the Market
While the 2024 election has added another layer of complexity to an already challenging market, the housing sector is driven by larger economic forces rather than political outcomes alone. History shows that post-election periods often see renewed buyer interest, as market stability encourages those on the fence to move forward. In the end, a balanced approach to market dynamics — focusing on interest rates, housing supply, and local economic conditions — will guide most homebuying decisions far more than the influence of any election.