There’s really no historical evidence to suggest it’s a bad time to buy in the months leading up to a presidential election. While the market dynamics seem to point to lower interest rates in 2025 there is no outright guarantee of that and waiting on the sidelines for better interest rates may well translate into paying a higher purchase price which is potentially a negating force.
That being said, there are some historic trends and factors surrounding election years that may influence the housing market and buyer sentiment, and it all comes down to consumer confidence. This tends to waver during election years due to general uncertainty. Lower confidence can temporarily reduce homebuyer activity, especially for first-time buyers or those whose purchasing power may be sensitive to economic shifts.
Here three key considerations when debating if a home purchase is right for you during an election year:
1. Market Uncertainty: Interest Rates & Stock Market Volatility
Presidential elections tend to create uncertainty in various sectors, including the housing market. People might hesitate to make large financial decisions, such as buying a house, due to concerns about economic shifts under a new administration.
Interest Rates: Interest rates can be a key factor in buying a house. When interest rates are low, it is a good time to buy regardless of election timing. However, with higher rates, sometimes buyers want to see if there are changes post-election that bring down rates and boost the broader economy before making a large financial commitment.
Stock Market Volatility: Real estate and stock market prices are intrinsically linked. When stocks turn south, the most immediate effects are felt in the luxury homes sector. The stock market often fluctuates during election years, and this volatility can impact consumer confidence. Homebuyers who are heavily invested in the stock market might become more conservative, delaying major investments like home purchases until after the election.
2. Impending Policy Changes
Some buyers may worry about potential tax reforms or housing-related policies changing under a new administration, such as changes to mortgage interest deductions or homebuyer tax credits.
However, the effect of a presidential election on the housing market can vary depending on the location. States or regions that are heavily influenced by federal policies (such as areas with a strong government or defense presence) may see more significant market reactions during elections compared to regions less affected by federal policies.
3. Historical Data on Home Prices
Home prices and sales volume generally do not see dramatic shifts during election years. Although housing prices may take a hit in November, data suggests that it doesn’t last long. Actually, according to a Bankrate Analysis of the S&P CoreLogic Case-Shiller Home Price Index, the average appreciation rate for homes in election years was 4.84%, compared to 4.44% in non-election years.
So although there might be a slight cooling off in activity leading up to the election, this tends to balance out shortly afterward. It’s always key to remember that, over the long term, home prices have continued to rise regardless of the party in power, indicating that the election itself does not significantly alter housing market fundamentals.
Buying a house right before a presidential election is not necessarily a “bad” decision, but the decision should account for potential uncertainty and market conditions. In fact, we’re seeing many home sellers who are anxious about selling properties and willing to accept pricing that may well be lower than what we believe their home will be worth heading into the spring of 2025.
Ultimately, buyers should focus on their personal financial situation, interest rates, and local market conditions when deciding whether to buy a home around election time, rather than solely considering the timing of the election. Perhaps most importantly, if buyers are ready for a lifestyle change, our message is to forge ahead with a new house without trying to “time” the market!