The year 2020 has been a strange one, indeed. With the onset of a pandemic, and the polls closing in November for a presidential election, it’s a wonder that the real estate market is in a state of confusion.
Almost any kind of change in society could affect the real estate market in some way. For instance, the stock market can change the performance of the market. And now, the coronavirus basically bombed the Airbnb statuses. Thereby, it goes without saying that an election will dramatically rattle the real estate market, too.
Why is this? What causes such a radical change from one season to another, or from one year to another? The answer comes from two different places: one is the consumer, the other a candidate.
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Consumers
Consumers are an unpredictable bunch. We watch a lot of news, we listen to friends and family, and we don’t always understand what we are hearing or seeing. The information we receive comes from a variety of sources and hearsay. Only by doing the actual research regarding the candidates and their proposals can we, as the public, acknowledge what is truth and what is rumor. The uncertainty is where the problem lies with the real estate market.
When people are unsure of what will happen in their lives, they worry about the smallest detail. They fret and wonder about their finances and their comfort. Will they have a job after the elections? Is the nation going to dive into a depression or a recession? These kinds of questions cripple society and prohibit any buying or selling. When people are trying to decide what they want to do with their money, they aren’t looking at what’s good for the economy as a whole. They’re only concerned about how the results of the election will affect them and their families in particular.
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History and Statistics
The statistics don’t lie. According to various websites like https://www.avantehomebuyers.com/, it’s a difficult time for the real estate market. Generally, in the autumn season, real estate drops. After a hot summer, it’s the typical reaction. People are getting ready to settle in for the cold months and the holidays. Research tells us that during an election year, there is an even greater drop. The change in home sales went down by –15 %. This happened right before the elections. The following year, fall sales only dropped by 8%.
As far as the real estate market goes during the elections, selling your home may be very difficult compared to another time. However, if you’re planning on buying a house, there may be a lot less competition from September to November. It seems as if the home appreciation rises, and this begins before the elections even start.
According to most research, homes can appreciate +6% in the year before an election. It will rise +4.5% during the election year and will go up +5.3% the year after. Those are some definite increases, all due to a presidential election. It may not seem like big numbers for the average person, but it can add up to thousands of dollars, depending on the median price of properties at the time. So, if you’re in a ‘offer house ASAP’ mode wherein you’d like to offer up your house for sale as soon as possible or snag that dream house of yours immediately, it might be wiser to let this type of season pass.
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Candidate
Another factor that affects the real estate market during the elections is whether or not the candidate has a definite plan or outline regarding his election. The agenda of the president-elect can make a great impact on the market due to the rate of federal funds. This can impact mortgage rates tremendously. It’s almost as if the real estate market goes hand in hand with politics, and this is due to interest rates. The lower the rates, the more the consumer can get a decent mortgage or place a higher down payment on a home, therefore creating business.
As the presidential race continues, many people may wait for anything new to come about regarding taxes. This will also have a negative or positive influence on the ability to sell or buy real estate. The result is a drop in the volume of real estate sales during the time of an election.
Conclusion
With the presidential election coming up very soon, there is an air of uncertainty spreading across the country. The real estate market is suffering for it. Such doubt and ambiguity are altering the attitudes of buyers and sellers, which is affecting sales and home values.
People don’t like not knowing what’s going to happen to them. They are afraid of change. The general public trembles when it comes to making important decisions during times of great decisions. This fear shakes their livelihood, and therefore, it dramatically affects the real estate market as well.