How Presidential Election Years Shape the Housing Market

By: Erik J. Martin Reviewed By: Aleksandra Kadzielawski

In case you haven’t been paying attention, the presidential election is now less than six months away. A lot can happen between today and November 5 – the date we cast ballots – especially in the real estate market. Indeed, the impact of the campaigning and forthcoming vote on home buyers, sellers, mortgage borrowers, lenders, builders, real estate agents, and other players in the housing market can be significant.

How can presidential election years shape the real estate sector? Where are home sales, housing prices, inventory, and mortgage rates headed this year? And what will happen to housing if Biden, Trump, or a third party party candidate wins in the fall? We’ve consulted with a panel of experts for answers. Read on for their insights and predictions.

Why and how presidential election years matter to the housing market

We hold presidential elections every four years. These election years can have a bigger influence on real estate matters than you might expect. Here’s what our pros had to say on that topic.

Al Lord, founder/CEO, Lexerd Capital Management: “Presidential election years affect the national housing market and mortgage rates through three interrelated channels: uncertainty, policy expectations, and consumer confidence. Uncertainty about election outcomes and the future political and economic landscape may cause buyers and sellers to either be more cautious and take a wait-and-see attitude on key buying and selling decisions or accelerate their decisions. Expectations about policy changes that may affect housing regulations, rent control, access to homeownership, eviction protections, tax policies, zoning reforms, and subsidies for housing all impact the behavior of buyers and sellers. And consumer confidence, or the lack thereof, can lead to a market slowdown. This is because consumers may choose to postpone major purchases or sales until they gain greater confidence in the country’s direction.”

Dennis Shirshikov, adjunct professor of economics at City University of New York: “Presidential election years often come with a degree of uncertainty that can impact investor sentiment and economic activities – including the housing market. Historically, we’ve observed a wait-and-see approach from investors and consumers alike, leading to fluctuations in demand for new mortgages and homes. The anticipation of policy changes can cause lenders, for example, to adjust their risk assessments, which in turn influences mortgage interest rates.”

Mike Wall, real estate investor and agent with eXp Realty: “During election years, there is often a notable trend of market slowdown, especially as the election date nears. This hesitation stems from sellers and buyers awaiting the election outcome, hoping to gauge the future economic direction before making significant financial decisions. The uncertainty can lead to a temporary decrease in home sales.”

How presidential election years are different

Every fourth year presents a different dynamic than the years between, the experts agree.

Colten Claus, associate broker with 8z Real Estate: “Unlike other years, presidential election years are characterized by potential shifts in national policy direction, which can lead to economic volatility. The uncertainty about future economic policies and their implementation can cause temporary hesitancy in the housing market – affecting demand, pricing, and mortgage rates.”

Jonathan Feniak, general counsel and head of finance for Company Sage: “During non-election years, there are generally fewer large-scale political shifts that could impact the economy or the specific measures that govern housing and finance markets.”

Lord: “Consumers may be more cautious, awaiting the election outcome to gauge potential changes in economic, fiscal, and regulatory policies that could impact interest rates, housing affordability, and investment attractiveness. This period of speculation can temporarily disrupt the usual patterns of the housing market and mortgage rates compared to non-election years.”

Examples from previous presidential election years

For proof that election years can have an outsized influence on real estate, it’s constructive to look back four, eight, 12, 16, 20, and even 24 years earlier.

Dana Hendrix, senior vice president of Finance, DSLD Mortgage: “The level of uncertainty during the 2020 election was exceptional. Before the election, a lot of people wanted to buy homes when mortgage rates were at a record low. Others waited both because they felt uneasy about the long-term impact of the COVID-19 pandemic and the impact of the election.”

Shirshikov: “In the 2016 election, there was notable uncertainty about future economic policies, which led to fluctuations in mortgage rates as lenders tried to anticipate the new administration’s fiscal policies.”

Claus: “The 2012 election period was marked by recovery from the 2008 financial crisis, with ongoing policy measures affecting housing and mortgage markets.”

Lord: “In 2008, during the financial crisis, mortgage rates decreased dramatically by almost 1% – from an average of 6.46% to 5.53%, driven by broader economic conditions beyond the election itself. In 2004, as it became apparent that Bush would be reelected, expectations for more fiscal stimulus increased mortgage rates at the end of the year and created a short-term demand for housing by the end of 2004. And in 2000, as expected considering the continuation of market deregulation, the 30-year fixed-rate mortgage experienced a notable drop from around 7.79% in November to an average of 7.13% by the end of December.”

Housing market predictions for this presidential election year

Based on these precedents, it’s fair to assume that politics and the forthcoming election will shape the national housing market over the next several months. But to what extent? Here’s what our panel forecasts.

Brent Chandler, CEO of FormFree: “Uncertainty during the election season may slow down home sales temporarily as buyers await clarity on potential policy changes. Home prices might stabilize or experience slight decreases in some areas due to reduced demand, which could slightly improve affordability. Long-term mortgage rates could be impacted, as well, potentially resulting in changes based on market perceptions.”

Feniak: “I expect home sales to experience fluctuation, with potential dips and activity leading up to the election and a post-election rebound. Home prices and affordability could be influenced by proposed fiscal policies from candidates, which may affect consumer confidence and purchasing power. Housing supply often correlates with market confidence, which is why a contentious election will likely lead to a temporary lull in new listings – whereas a clear outcome may bolster market entry. Mortgage interest rates could see speculative swings but will largely depend on the Federal Reserve’s responses to economic conditions and inflation. Overall, the national housing market is likely to be resilient, with possible short-term hesitancy around election time followed by a return to long-standing market trends.”

Lord: “I anticipate existing home sales will marginally increase in 2024 to 5.11 million units due to small increases in inventory and potential decreases in interest rates. Mortgage rates are expected to decline by the end of the year, as the Fed is considering rate cuts later this year. Expect median home prices to increase to $417,000 in 2024 due to limited supply. I predict a moderate increase in new home sales, to 710,000 units up from 675,000 units due to a stronger construction pipeline. Inventory will improve, but marginally. The U.S. housing market is expected to be in short supply while housing demand will remain high.”

Shishikov: “This year’s presidential election is likely going to introduce a period of uncertainty that may lead to reduced home sales in the short term, as potential buyers and sellers wait for clearer signals. This could potentially affect home prices and affordability. In areas of high demand, prices may continue to rise due to limited inventory. However, in areas with more supply, prices could stabilize or even decline slightly. Mortgage rates could experience volatility as financial markets react to the election’s perceived impact on fiscal and monetary policy. Ultimately, the housing market nationally might see a temporary slowdown in activity leading up to the election followed by a potential rebound as policies become clearer.”

Claus: “I expect mortgage rates to fluctuate based on expected fiscal policies, inflation expectations, and Federal Reserve actions. Home affordability and prices will be influenced by the proposed economic policies of the candidates, which would affect consumer confidence and spending power. Home sales, meanwhile, will experience volatility as buyers and sellers react to the electoral process and outcomes.”

After November 5

These prognostications take us up to November 5. But what happens following that date and over the subsequent four years? How will things shake out in real estate depending on who wins this November? We pressed our experts for further predictions based on a hypothetical win by each presidential candidate, asking each respondent to remain objective and refrain from endorsing, favoring, or criticizing any political party or candidate. Their input follows.

If Biden wins

A Biden victory in the presidential election could bring about significant shifts in housing policy and market dynamics. Here are insights from experts on how they foresee the market:

Martin Orefice, CEO of Rent To Own Labs: “A Biden victory could mean another big IRA-style bill that will work to address home affordability, especially in large cities. We could see denser zoning laws and more money for big construction projects like apartments and conversion of office space. One thing that likely won’t change regardless of who is in the Oval Office next year is the prime borrowing rate. The Fed is designed to be insulated from politics, and I expect them to keep interest rates high until they’re positive that inflation is under control.”

Chandler: “A Biden reelection will bring steady growth in the housing market due to a focus on affordable housing. Home prices may rise moderately, but affordability measures could help. Mortgage rates are likely to remain stable with minor fluctuations.”

Hendrix: Biden’s proposals may center on addressing housing affordability and increasing options for homeownership. For instance, it could consist of programs to assist low- and middle-income households as well as initiatives to increase activity in the real estate market.”

Claus: “If Biden wins, we may see continued focus on housing affordability and regulatory measures, likely affecting market dynamics and interest rates.”

Lord: “Zoning and land use regulations, along with environmental regulations like green energy initiatives, will restrict construction and/or make it more expensive. Housing demand will be high, and prices will climb even higher. Rental regulations and eviction protections will make the commercial real estate sector, especially multifamily, unattractive for investments in cities and states that allow rent control.”

If Trump wins

In the event of a Trump victory, the housing market could experience a different set of shifts and policy directions. Let’s delve into how experts foresee these changes unfolding in the housing market:

Orefice: “A Trump win would signal a general reduction in regulations around things like home financing, insurance, and environmental regulations. You can expect this to translate into a boost in new home construction, especially in relatively distressed markets like Florida, Texas, and California.”

Feniak: “A win by Trump could lead to deregulation efforts and potentially lower tax rates, which may temporarily boost market activity but could also come with increased market volatility and potentially higher interest rates due to inflation concerns.”

Lord: “A reduction of federal regulations will make construction less expensive and provide affordable prices to homebuyers in the medium term. Tax cuts will stimulate more investments in housing and indirectly maintain real estate prices. Immigration policies and unfulfilled demand for housing will accelerate new construction and spur growth in the housing market.”

Chandler: “I expect potential housing market growth with pro-business policies. Mortgage rates should remain stable or slightly increase based on economic policies. And home prices could grow moderately, with some areas facing affordability challenges.”

If a third-party candidate wins

Feniak: “A third party win could introduce new and less predictable policies, causing initial market uncertainty but potentially innovative approaches to housing issues that might benefit affordability and supply in the long term.”

Claus: “A third-party win could introduce uncertainty but might also bring innovative housing policies, affecting market trends and interest rates.”

Chandler: “Initial market uncertainty could slow real estate activity. Mortgage rates may fluctuate because of market uncertainties and policy changes, and home prices and affordability trends will be uncertain depending on new policies.”

The bottom line

While no one can predict with 100% accuracy who will win the 2024 vote or how this election season will alter the real estate landscape, it’s interesting to project ahead and consider how things will transpire that can affect home sellers, purchasers, Realtors, builders, lenders, and others who have a stake in the housing market.

However, don’t let concerns about politics, policies, campaign promises, or the likelihood of a candidate being elected prevent you from shopping for a home and a mortgage or selling a house if the time is right and you are financially prepared. For the best advice, consult closely with trusted professionals, including an experienced real estate agent.

Authored By: Erik J. Martin

The Mortgage Reports Contributor

Erik J. Martin has written on real estate, business, tech and other topics for Reader’s Digest, AARP The Magazine, and The Chicago Tribune.

Reviewed By: Aleksandra Kadzielawski

The Mortgage Reports Editor

Aleksandra is the Senior Editor at The Mortgage Reports, where she brings 10 years of experience in mortgage and real estate to help consumers discover the right path to homeownership. Aleksandra received a bachelor’s degree from DePaul University. She is also a licensed real estate agent and a member of the National Association of Realtors (NAR).