Four Reasons Why The Election Will Not Dampen The Housing Market

Four Reasons Why The Election Won’t Dampen The Housing Market

It’s election day so here are four reasons why the election will not dampen the housing market. If you are planning on buying or selling a home in the future.

The decision on who will be our next president will have a major impact on many aspects of life in this country, but the residential real estate market will not be one of them. With everything that has happened this year the housing market will remain strong for four reasons.

Four Reasons Why The Election Will Not Dampen The Housing Market

1. Demand Is Strong Among Millennials

The demand among millennials which is the nation’s largest generation began entering the housing market last year as they reached the age to marry and have children which are two key drivers of homeownership.

As the Wall Street Journal recently reported:

“Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.”

2. Historically Low Mortgage Rates

Historically all-time low mortgage rates are also driving demand across all generations. Strong demand created by this rate drop has countered other economic disruptions from the pandemic, recession, and record unemployment.

In addition, Freddie Mac just forecasted mortgage rates to remain low through next year:

“One of the main drivers of the strong housing recovery is historically low mortgage interest rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”

3. Home Prices Continue To Appreciate

With the continued lack of supply of existing homes for sale coupled with the surge in buyer demand has experts forecasting strong price appreciation over the next twelve months.

4. History Says So

Though it’s true that the market slows slightly in November when it’s a Presidential election year, the pace returns quickly.

Here’s an explanation as to why from the Homebuilding Industry Report by BTIG:

“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty. 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.”

Ali Wolf, Chief Economist for Meyers Research, also notes:

“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 as long as the economy stays on track.”

Bottom Line

There is no doubt this is one of the most contentious presidential elections in our nation’s history. The outcome will have a major impact on many sectors of the economy. However, as Matthew Speakman, an economist at Zillowexplained last week:

“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market – which has basically withstood every pandemic-related challenge to this point – will continue its strong momentum in the months to come.

So no matter what happens just looking at what is currently happening in the housing market and going over these four reasons the real estate market is going to continue to remain strong.

I am committed to the real estate market to make sure you have all the information you need to make your next move. Review all the information I have put together for you here on my website. If you would like more information on any issues of concern as well please contact me. I look forward to hearing from you. Have a great day.  

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