Does Unpredictability in Politics Lead to Unpredictability in Real Estate?
While corporations tend to postpone big deals till after the election, home buyer demand has not let up
Historically, the time during a presidential election leads to an economic pause. The stock market typically slows down, corporate investments are postponed, and many companies wait until after the election to continue with major deals. In such a period of uncertainty, it’s no surprise that people want to wait and see what the next president has in store before making big decisions. However, the housing market is predicted to take a slightly different path this season.
Every four years people question what effect the Presidential election might have on the national housing market. Let’s take a look at what is currently taking place. The New York Times ran an article earlier this week where they explained:
“A growing body of research shows that during presidential election years — particularly ones like this when there is such uncertainty about the nation’s future — industry becomes almost paralyzed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner.
The research is even more persuasive on the final year of an eight-year presidential term, when a new candidate inevitably will become president.”
We are seeing this take form in the latest economic numbers. However, will this lead to a slowdown in the housing market? Not according to Fannie Mae, Freddie Mac or the National Association of Realtors.
The Impact on Housing Throughout 2016
Let’s look at what has happened and what is projected to happen by these three major entities.
National Association of Realtors
“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007.”
“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.”
“Consumers and businesses showed caution at the end of the first quarter…(but) Home sales are expected to pick up heading into the spring season amid the backdrop of declining mortgage rates, rising pending home sales and purchase mortgage applications, and continued easing of lending standards on residential mortgage loans.”
Even during this election year, the desire to achieve the American Dream is greater than the fear of uncertainty of the next presidency. Home prices continue to be on the rise and Americans recently ranked real estate as the number one long term investment. Increasing prices combined with low inventory have made the market prime for those thinking about selling their home. Demand is high, especially in southern California, so many homes are selling very quickly with multiple strong offers.