I’m an Economist: Here Are My Predictions for the Housing Market If Biden Wins Again
Written by
Laura Beck
Edited by
Jenna Klaverweiden
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The 2024 election is getting closer, and a lot of Americans are wondering how the outcome could affect big life decisions, like buying or selling a home.
If Biden wins again, what can homebuyers and sellers expect for real estate over the next few years? The outcome could have a big impact on your finances and the decisions you choose to make around buying, selling or staying put in your current home.
To get their predictions, GOBankingRates spoke to economists Clifford Rossi, executive-in-residence at the Robert H. Smith School of Business, University of Maryland, and Aaron Cirksena, founder and CEO of MDRN Capital. Here are their takes on where the housing market could be headed with a Biden win.
Don’t Expect Any Major Changes for Housing
If the president wins another four years in office, Cirksena doesn’t anticipate any seismic shifts in the housing market. He expects Biden to simply maintain his administration’s existing priorities and approach to housing issues, rather than drastically altering course.
“A Biden victory in 2024 will likely mean that the housing market will not see a dramatic shift over the next few years,” Cirksena said. “The Biden administration has shown that they are willing to run with a high budget deficit in order to fund social programs such as student loan forgiveness, green energy initiatives and healthcare spending, just to name a few.”
A Seller’s Market
Cirksena predicted that home sale inventories will remain low. Low inventory “means more buyers than sellers,” he said. “That would point to a continued elevation of home prices.”
In a seller’s market, buyers tend to face more competition and pressure to make quick decisions. This can lead to bidding wars and homes selling for far more than their asking price.
The Fed Will Keep Interest Rates High
If inflation continues rising in Biden’s second term, the Federal Reserve may keep interest rates high in order to try to keep prices down. Mortgage rates are closely tied to Fed actions, so this policy could have big implications for the housing market.
“The Fed will have to continue to be aggressive on interest rates to keep inflation in check,” Cirksena said. “Likely not raising rates more, however holding steady at or near the current levels wouldn’t be a surprise. If that’s the case, mortgage rates stay elevated and less people are motivated to sell as the group of Americans that has sub-4% interest rates stay put. Another plus for low inventory and higher prices.”
High rates mean homes would be less affordable for buyers. It also would limit current homeowners’ ability to refinance or sell, potentially leading to slower turnover and fewer homes on the market.
“I expect that getting inflation in line with the Fed’s target rate of 2% will continue to be a slow process and so don’t expect any real improvement in interest rates until sometime in 2025,” Rossi said.
Higher Mortgage Rates Are Here To Stay
For homebuyers who’ve been hoping and waiting for those super-low 3% mortgage rates to come back, they may need to face the reality that those days are over.
“Perhaps one of the biggest wildcards for 2025 affecting the housing market is where mortgage rates could head after the election,” Rossi said. “Whoever wins the election has very little impact on mortgage rates directly, though changes in inflation, brought on by continued deficit spending, could mean that mortgage rates would likely stay around 6%-7% range for a fixed-rate 30-year mortgage, which would continue to price many prospective homebuyers out of the market.”
Cirksena also predicted that mortgage rates would stay where they are. He expects that buyers who have been waiting for rates to drop will have to accept that these rates are the new normal.
“Buyers who have been on the sidelines for a few years step back into the market, but again, inventory is limited,” he said. “Higher demand and lower inventory means higher prices remain steady.”
The low rates of the last few years were most likely an anomaly. Rates of 6% to 7% are high compared with what we saw a few years ago, but they’re actually more normal, historically speaking.
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