How Elections Affect the Real Estate
As we approach the next presidential election, many people are curious about how it might impact the real estate market. You might be surprised to learn that elections can have a noticeable effect on home sales and mortgage rates. Let’s break this down using some data from the past.
Home Sales Tend to Rise After Elections
If we look at historical data from past elections, we can see a clear trend: home sales tend to go up after the majority of presidential elections. In fact, after 9 out of the last 11 elections, the number of homes sold in the year after the election increased.
• For example, in 2000, home sales went up significantly in the year after the election, continuing this trend through 2004, 2012, and 2020.
• This pattern suggests that once the uncertainty of an election passes, people feel more confident about making big decisions like buying a home. When people feel more secure about the
What’s interesting is that the election year itself may not always see a large boost in home sales, but the year after the election typically does. This is represented by the green bars in the graph below, which show an upward trend in those years.
Mortgage Rates During Election Years
Now, let’s talk about mortgage rates. Mortgage rates are important because they affect how much money you’ll pay over time when you borrow money to buy a house.
According to data, mortgage rates have tended to decrease in the months leading up to 8 of the last 11 presidential elections. This means that right before an election, you might see lower interest rates, making it a bit cheaper to borrow money for a house.
• For instance, in 1984, mortgage rates dropped by 1.03% from July to November, and in 2000, they dropped by 0.40%.
• However, not all elections see a drop in rates. In 1980 and 1992, mortgage rates actually increased slightly.
Why Does This Happen?
One reason for these trends is that elections can make people feel uncertain about the future. When people aren’t sure what will happen next with the government, they may hold off on making big decisions, like buying a house. But once the election is over, they feel more comfortable and confident, which can lead to more home sales.
For mortgage rates, things like the overall economy and decisions by the Federal Reserve also play a role. Leading up to elections, some economic decisions are made to help keep things stable, which can lower rates. But it’s always important to remember that many factors can influence mortgage rates, not just the election.
What Should You Do?
If you’re thinking about buying a home, it’s good to keep an eye on how the election might affect the market. You might see lower mortgage rates before the election, which could make it a good time to lock in a deal. Or, if you’re not in a hurry, you might wait until after the election when home sales tend to rise.
Conclusion
Elections can have a big impact on the real estate market, affecting both home sales and mortgage rates. Understanding these trends can help you make better decisions if you’re planning to buy or sell a home in the near future. Just remember, real estate is also affected by many other factors, so it’s always good to stay informed.
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