With the whirlwind of the 2020 Presidential Elections coming to a close, it has realtors wondering, will the elections effect the housing market? Yes and no. Although it can result in long term changes depending on the president and the policies they plan on changing, the person elected won’t necessarily effect the overall number of home sales. Keep reading on to see what we can possibly expect to effect the housing market.
So yes, in the time when the election is actually going on, there will be a drop off of home sales, but it is temporary. November is normally a time that home sales drop, due to the upcoming holidays and the shift to fall, BUT, compared to election years like 2020, home sales drop about 6% more. This can be attributed to clients being uneasy about what is going on nationally, and one thing that will effect the market quickly is consumer confidence. Economic health is linked to the real estate market, so the second that the economy could possibly face a change (i.e. the possibility of transferring power from one president to the next), people get uneasy and hold off on buying a home, but this will go away after the elections come to a close.
POLICY CHANGES AND INCOME TAX
So one way that the real estate market can face a long term change in result of the elections is if the president changes housing market policies or raises/lowers income tax. A raise in income tax will result in it being harder for people to get into a home since taxes will take more of their money and it will take longer for them to save. If there is a decrease in income taxes, people will take home more income money and in turn, spend more on the housing market. Policy changes to how homes are sold, how the government assists consumers in getting a home, etc. can have a long term effect on the market. For example, if the government passed laws decreasing first time homebuyer assistance programs, it would be harder for first time homebuyers and delay their process.
One policy change that Trump took was eliminating the Affirmatively Furthering Fair Housing rule and re-privatizing Fannie Mae and Freddie Mac. What these did was one, fund mortgages with private capital and reduced interest rate risks for banks, and reduce low-income housing from being built in the suburbs. Of course, changes like these happen post-election, so there will be some time to prepare for any policy adjustments.
THE BOTTOM LINE
Although there will be some growing pains, the real estate market will still thrive no matter who is elected. I mean sure, drastic policy changes can change the way we sell real estate, but at the end of the day, people will still buy homes, will still need loans, and will still sell their homes, so no worries. Real estate will always be here to stay.