Will Election Jitters Affect the Housing Market?

A global pandemic, historic unemployment, and civil & social unrest have all challenged the way we live. The real estate market seems to be one of the only things that have been unaffected.  According to a study conducted by the National Association of Realtors (NAR), new forecasts predict there may be more homes purchased this year than last year. During a typical election year, home buyers and sellers often hit the pause button in the month or so leading up to the election.  That pause, however, comes at the same time that the market tends to slow down seasonally, so it can’t be attributed entirely to political uncertainty. To predict how the 2020 election will affect the market, we must look at past data, as well as current activity and trends. According to research and analysis company BTIG, they noted that in non-presidential years (from 1963-2019) there is a -9.8% decrease in November compared to October.  However, in election years, the typical drop increases to -15%.  This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.  History also shows us, though, that this slowdown is temporary.  The economy, jobs, interest rates, and consumer confidence have more meaningful roles in the home purchase decision than a Presidential election in the months that follow. The same study showed that the year after an election is the best of the four-year cycle. But what about 2020?  This year, of course, is very different.  As we head into what many consider to be the most contentious election of the century, many home buyers are wondering whether they should wait.  This is where current activity comes in.  U.S. existing-home sales (and prices) soared in August.  The NAR reported that existing-home sales hit 6 million in August on a seasonally adjusted yearly basis. That is a 10.5% increase from August 2019. Early indications of September numbers follow suit.    With interest rates and inventory low, and buyer activity still high, the real estate market should remain strong up to – and past the election.