Blog posted On October 20, 2020
When an election is approaching, all of America’s attention is focused on the candidates and the future of our nation – the only house that people are concerned about is the one on Pennsylvania Ave. As is expected, many home buyers and sellers are currently wondering how the upcoming presidential election will impact the housing market.
According to Redfin analysis, presidential elections have had a minimal impact on home sales over the past 40 years. During election years, home sales increased by an average of 0.4% in October and November. In December, sales dropped by an average of 1.5%, but recovered that 1.5% in January. However, 22% of all home buyers and sellers are still adjusting their plans because of the upcoming election – with 13% of Redfin survey respondents reporting they are more hesitant to buy or sell. Redfin real estate agent Alisha Pruitt claims that almost all of her buyers have asked how the election would impact their closings. Pruitt responded by saying that “presidential elections have never seemed to affect the housing market much in the six election cycles I’ve been a real estate agent.”
Pruitt says that the coronavirus pandemic will impact the housing market much more than the election. While only 22% of buyers and sellers claimed that the election was impacting their plans, 75% of all buyers and sellers say that the coronavirus is affecting their plans. Buyers are flooding the market to take advantage of record-low mortgage rates and perhaps find a place with more space to work from home.
Chief economist for Redfin, Taylor Marr, said that housing market expectations from the beginning of the year “have been shattered as low mortgage rates and the desire for additional space drives an uptick in sales.” The more time people spend at home, the more space people feel they need. Coronavirus has not only changed the mortgage rates, but it’s changed the features that people search for in a home. Pre-pandemic, many home buyers searched for houses that were near large cities, for the convenience of work. Now, as more companies are working remotely, people are fleeing the cities to find more isolated homes with more space.
Redfin predicts that home sales will continue to grow this Fall and reach a level of 6.2 million by the end of the year. If the predictions come true, this would be the most homes sold since 2006. Many factors are considered in the Redfin forecast including regional sales trends, mortgage rates and income growth. Therefore, depending on the election results, home sales could reach a level as high as 6.4 million – 6% higher than 2019.
“Home sales typically don’t rise or fall much during the months surrounding a presidential election compared with those same months in non-election years, and although the upcoming election is happening at a particularly tumultuous time in our country’s history, I expect the trend to remain the same,” said Marr.
While the election as an event is not predicted to affect the housing market drastically; the election results, on the other hand, could. Each candidate has their own housing policies they plan to implement, and the winner of the election could influence the housing market with their policy changes. We will continue to cover the specific affects each candidate could have on the housing market should they become president.