Thursday, October 10, 2024 / by Matthew Lawson
How Elections Affect the Real Estate Industry
Elections…. man…..they sure are fun! I’m not sure what’s better, the debates, excess junk mail, campaign commercials, or the excess arguing on social media? It’s just all so much fun to experience every 4 years….
Truthfully, regardless of how you feel about the presidential options or your political affiliation, it’s amazing that we do get to a vote for the future of our Country. Unfortunately however, elections bring about a lot of turmoil and unrest for our Country. This unrest bleeds into every aspect of our lives during election season, which is likely why it feels so tumultuous. The real estate industry is always interesting in election years, add in higher interest rates (that are finally starting to come down, yay!) and you’ve got a mix of weird and weirder.
I’ve been in the real estate industry for 5 election cycles and I’ve learned that each election year has a similar impact on the real estate industry. As both parties point fingers at issues caused by the other and how they’re going to solve them, Americans are made to feel uncertain about their futures and the future of our Country. This uncertainty infects the real estate industry and causes buyers and sellers alike to question their real estate future. In turn, this slows everything down, not to a screeching halt mind you, but a definitive and quantifiable slow down.
Each election year I’ve been in the real estate industry starts off just like any other. Slowest in January with activity increasing around mid-February. Sales activity climbs through late June before it hits a bit of a stall around Independence Day. Mid July homes sales reach it’s peak before the slow decline through August. At the end of August is where things tend to change in an election year.
In a non-election year the market plateaus through August and September and we see a slight jump in October from buyers looking to make moves before the holidays. In a non-election year once we hit November sales activity declines further to it’s lowest point in December due to Thanksgiving and Christmas Holidays.
In an election year, the plateau in August and September turns into continuous downward sales activity. This continues through October with no increase as in non-election years and takes a steep drop about 1-2 weeks before the election. This is where things always get interesting.
After the election in November is over and the new president elect is announced and the collective sigh of relief that the world is not over, the market spikes. Every single election year I’ve been a part, regardless of who wins the presidency, sales activity increases exponentially compared to non-election years.
What has become apparent to me is that election years tends to cause a lot of unrest in the real estate industry, and it causes buyers and sellers both to hit the pause button. The key to this is it’s the PAUSE button, not the stop or reverse. They pause all throughout the year and question what’s the right decision. As we get closer to the election the uncertainty causes a larger number of buyers and sellers to put their plans on hold. I believe this is caused by the increase in negative news and final campaign pushes of both parties. After the president elect announcement it’s almost as if the buyers and sellers all collectively hit PLAY and their searches begin right where they left off.
For the remainder of the election year the pent up demand continues and buyers and sellers flock to the market in droves. There’s of course a traditional slow down right around the holidays, but between election day and new years the market is hotter than it has been the entire last year.
Now, the caveat to all of this is interest rates as those have been historically high, but they’re coming down. Some buyers and sellers are still handcuffed by the rates and need them to drop a bit more for moves to make sense. This is where there’s opportunity for anyone looking to buy or sell right now.
Because of the slowdown that’s happening right now sellers that have their homes on the market are willing to cut better deals. This could be because of the uncertainty of the election, or because of stagnation in the buyer market. Regardless, for buyers that are willing to look now you might have the best opportunity to get a deal, and you might not get the same opportunity for another year or more. Especially with rates trending downward it’s expected that buyer activity is going to increase considerably over the next several months. For Sellers, holding out for the post election spike may be your best option with the expectation that the market continues to rise over the next several months. Of course this is a double edged sword as sellers are typically buyers as well, so timing becomes very important.
If you take anything away from this article, understand that regardless of the outcome of the election the real estate market will not collapse. History has proven time and time again that real estate is one of the strongest long-term investments. If you continue to postpone your entrance into the market, you’re allowing the gap to grow further and further, eventually becoming unattainable.
As always, if you have any questions about the market, or want to discuss buying or selling please don’t hesitate to reach out to me directly at 980-250-2795 or Matt@briggsamerican.com.