As the US approaches the election year some of the potential buyers seem to hold back their demand to purchase a home unsure of who will be making fiscal decisions for the US next. However, there is some question as to whether this is really accurate – that election nerves are being reflected in the data in this way at all? I suggest now we look at what might be actually going on.

The Effects of Election Stress on Real Estate

Interviews are indicative of the fact that the election is leading to some buyers putting their plans on hold. According to reagents, prospective clients are becoming reluctant to make their decision and wait for November 5 in order to assess the outcome. In this line, the hesitation for many stems from beliefs that changes are possible in; the cost of houses, interest rates and general economy based on the outcome of the election.

For example, first-time buyers are optimistic about the possibility of the down payment support from Kamala Harris. Some people just what if speculative economic policy changes could impact jobs or the wellbeing of a small enterprise. One of the clients interviewed, a real estate agent based in Louisiana called Crystal Bonin noted that quite a number of the people she has met are especially apprehensive, some of whom expressed themselves thus: ‘I need to see who wins to know how it’s going to affect me, especially my business’.

In general the housing market does tend slowly down around elections as people wait for the outcome. But the numbers tell the story quite the opposite this time around.

Revisited: The Countercyclical Conundrum of the Housing Market

The data from Redfin shows that the demand for housing is still strong, and maybe even strengthening in some markets. In the four-week period through October 20, pending home sales were 3.5 per cent higher compared to levels recorded a year earlier. This increase occurred in 35 of the 50 largest metropolitan areas and reflects the post-pandemic peak in housing in 2021.

Pronounced also is the growth of listings from the sellers; in this case, up 2.2% for the year. This is even higher compared to the previous months, not only have more homes been listed online, but the asking price is also 6.1% higher as well now. These metrics are particularly important given that mortgage rates are soaring marking 6.44% by October 20 from 6.08% only a couple of weeks ago. Purchase applications actually rise even when the rates increase and it appears buyers will do what is takes before the rates go higher.

This data indicate that although there is election anxiety, this has not been reflected in stagnant market activity. In fact, some buyers may decide to act as soon as they can, believing that the result of this election will further the hike in housing costs.

How Much of an Impact Does the Election Actually Have on Housing Markets?

In the past, looking at the years that featured elections, there are normally not lasting effects on housing. Research using data from HUD and NAR also used data from elections since 1978 and found that home sales increasing was seen in 9 out of 11 occasions in the following year after the elections. Their prices also were rising during twenty-three of the last twenty-seven presidential terms, although they stagnated during the other four years after the financial crisis of 2008.

Mortgage rates also normally move downward in the twelve months following an election. These trends generally speak of a greater measure of stability in the housing sector than one would expect, and its capacity to adapt to the shift in power.

Looking Ahead: Long Term Factors Affecting Its Market

That is why those existing in the course of the new administration could affect the housing landscape in the years to come but as any changes, these take time to surface. Though changes in homebuilding, federal land use for housing, and rent control measures may affect the overall market in the long run, it should not have short-term affect on buyers or sellers.

Lastly, what can be observed is that, despite current apprehensions among the buyers and investors, the historical analysis shows that generalized short-term impacts of the elections on housing are negligible. For now, the market, in all likelihood, will remain on this path no matter who is victorious in November.