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How Do Elections Affect the Housing Market?

How Could An Election Affect the Housing Market?

Elections affect the housing market less than people might think. However, there can be an impact because of public perception of what could happen before the election and in the policies put in place after the election is over.

Neither political party can claim to have a perfect track record on economic issues. Both parties have overseen good times and bad times at the federal and state levels. But elections can create perceptions that can impact the real estate market – and sometimes, so can policy.

The thing to keep in mind is that the real estate market continues to move in one direction over time – up – no matter who is in office. Most of the impact of elections comes from people’s attitudes, not actual economic facts.

Before the Election

Before an election happens, the real estate market can be affected in several ways. They include the following.

  • Wait and See. Some sellers may hesitate to put a house on the market – and some buyers may hesitate to commit a down payment – because they want to wait and see who wins the election and what policies could come from a new government
  • Developments on Hold. Developers may also wait on big projects because for them the stakes are high if a new government takes a radically different approach
  • Things Will Get Better. If a state or the nation is currently in tough economic times, then both home buyers and sellers may wait until after the election is over because they think there’s a chance things will get better if a certain candidate wins
  • Slower Price Increases. Historically, the price of homes has increased in election years, but at a slower pace (this is especially true in presidential election years)

After the Election

All the below is highly speculative and uncertain because different politicians promise different things and not all deliver on those promises. Slashing tax rates, for example, might spur home buying. A promise to raise taxes might slow home buying. But even those two aren’t certain.

Here’s a look at some possible ways elections affect the housing market.

  • Taxes. As noted above, promises to cut and/or raise taxes can have an impact on the amount of cash people have on hand, impacting their decision to buy real estate
  • Fresh faces. New politicians in office can often bring a renewed sense of optimism and believe things will improve, making more people optimistic about the market (this is especially true if the incumbent was unpopular)
  • Developments. Developments can stall if a previous administration is ousted by voters and planned projects are shelved. However, it also can mean new projects are unveiled
  • Certainty. If the person elected was the one who looked like they were going to win in the months leading up to the election, then the housing market often has little reaction. It’s close elections and uncertainty that lead to concerns about the market

Keep in mind that historically, things even out with housing prices and the number of buyers and sellers in the market. It’s a good idea to keep an eye on elections if you are in the housing market to buy or sell, but elections typically don’t affect the housing market in the long run.

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