Real Estate And The 2020 Presidential Election
As we approach the final months of 2020, it's clear that this year will go down in history as one filled with challenging times. A pandemic that stretched across the globe, massive unemployment caused by a recession and social unrest in several cities across the nation like never witnessed before. Despite these challenging times, real estate overall seems to be unaffected as a new forecast predicts more homes will be purchased in 2020 than bought last year.
As we inch closer to an end of this turbulent year, we still have a presidential election hurdle to cross, which has turned out to be one of the most combative elections I can remember. It's important to take into account the affect of past presidential elections on the real estate market.
Do Home Sales Decline During A Presidential Election?
A research and analysis company BTIG measured new home sales going back to 1963 thru 2019 in a report titled On House-Two-House Red House-Blue House. The findings revealed there is a negative (-9.8) decrease in November as compared to October in non-presidential years. This is a normal seasonality market. a cooling off period of activity that's typically noted in autumn and winter.
The findings also show the usual drop rises to negative (-15%). The report goes on to say,
"This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.”
Are Those Sales Gone Forever?
No, they are not. The report concluded:
“This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”
Meyers Research & Zonda completed research on their own - concluded these sales were not gone, rather they are delayed until after the election is over. Chief Economist Ali Wolf said,
“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year.”
Democrat Or Republican - Does It Matter?
Perhaps to some point - but not when we measure the total home sales overall. Consumer confidence is a defining factor when home-buyers consider purchasing a home of their own. Consumer confidence significantly affects the real estate housing market after an election. The BTIG study found,
“A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.”
In other words, no matter which party prevails, overall sales are not significantly affected.
If we continue to see historic low interest rates, the economy continues to rebound and unemployment remains in check, the real estate market should remain healthy and robust at the time of the election and the months following.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.