How Will This Year’s Election Impact the Real Estate Market?
Written by
Gabrielle Olya
Edited by
Amber Barkley
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Election years can be impactful for the state of the overall economy, as well as for the real estate market in particular. But will this year’s election bring about big changes to the real estate market, or is it predicted to be more of the status quo?
Here’s what one expert predicts.
Understanding the Current State of the Real Estate Market
Before looking ahead to how the election results could impact the real estate market, it’s important to understand the market’s current state. Right now, we’re in a phase where mortgage interest rates are dropping.
“All interest rates, including mortgages, are experiencing a decline,” said Craig Studnicky, CEO and president of RelatedISG Realty. “It is worth noting that [as of] the third week of January, there has already been a decline in rates, with an expected further decrease of 0.5% to 1% by the end of the year. It is interesting to note that this is happening during an election year, although mortgage rates do not always decrease during a general election.”
Whenever interest rates drop, more buyers enter the market, as they can now afford more desirable homes.
“For example, at an 8% interest rate, one can afford a small house, but at a 6% interest rate, one can afford a larger house for the same price,” Studnicky said.
With more buyers entering the market, supply is becoming tighter.
“This influx of buyers has caused a shortage of supply in South Florida, with the United States as a whole being approximately 5 million houses short of meeting the demand,” Studnicky said.
As demand outpaces supply, home prices will increase.
“As mortgage rates continue to decrease, the robust demand will be met with limited inventory, leading to an expected increase in prices by 5% to 10%,” Studnicky said. “Last year, when mortgage rates were high, there was an 18% increase in prices. Therefore, it is anticipated that prices will continue to rise.”
How an Election Year Can Impact the Real Estate Market
“The general election year tends to experience a slowdown [in the real estate market] due to uncertainty,” Studnicky said.
However, given the current mortgage rate environment, Studnicky does not believe that will be the case this year.
“This year’s election will not have as significant of an impact on buyers as before due to lowered rates,” he said. “Buyers are not concerned about who occupies the White House as long as mortgage rates continue to decrease. The real estate market will respond positively to the lower interest rates.”
Would a Democrat or Republican President Be Better for the Real Estate Market?
Although presidential elections can often tip economic scales, Studnicky does not believe that will be the case this year.
“The real estate market will not be significantly impacted by the outcome of the elections, regardless of whether Democrats or Republicans emerge victorious,” he said. “The level of buying activity in this market is primarily influenced by interest rates and the overall state of the economy, rather than the political party in power.”
Should You Buy or Sell This Election Year?
If you’re a prospective homebuyer or seller, you might be wondering what your best move is this year. Studnicky believes the answer depends on where you live — or want to live — not the outcome of the election.
“The decision to buy or sell depends on your location,” he said. “If you are a seller, now is the opportune moment to sell and capitalize on the market. Condos are being sold at record-breaking prices.”
Buyers in the Western and Northeastern regions should expect high prices, whereas prices in the South are relatively low, Studnicky said. However, the prices you get will depend on the level of inventory available in the specific area where you want to buy.
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