I was talking with a potential home buyer last week who let me know they had decided to put their buying plans on hold until after the election. There is no doubt that 2020 will go down in history as one of the most tumultuous and challenging years of the modern era. There’s been a worldwide pandemic, a recession and historic unemployment caused by the worldwide pandemic, and a level of social unrest perhaps rivaling any in our history that will undoubtedly change the way we live in the future. Through it all, the real estate market seems to be unaffected and there may very well be more homes purchased this year than last year.

In addition to everything else we have been dealing with, we’re preparing for perhaps the most contentious presidential election of the century. In trying to understand the impact this presidential election might have on the real estate market I look back at the impact past presidential elections have had.

Do Home Sales Drop-Off in Presidential Election Years?

BTIG, a research and analysis company, took a look at new homes sales from 1963 through 2013 in their report titled One House, Two House, Red House, Blue House. What they found was in non-presidential election years there was a 9.8% decrease in sales in November compared to October. This drop-off equates to the normal seasonality that most markets see as there is usually a slowdown in the fall and winter.

In presidential election years, the report revealed that the typical sales decline in November from October was 15%. The report explains:

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

Are Those Sales Lost Forever?

No. The BTIG report determined:

“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.”

This is similar to what we saw during the lockdowns as a result of the pandemic this past spring. The traditionally busy spring season in the real estate market wasn’t lost but got pushed to the summer.

A separate study was done by Meyers Research & Zonda, Ali Wolf, Chief Economist, agreed that those purchases are not lost, just delayed until after the election.

“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.”

Will Who Wins the Election Make a Difference?

While we all have our own opinions on what the future looks like depending upon who wins, when we look specifically at the real estate market which party wins has historically only mattered to some degree. As mentioned above, consumer confidence plays a significant role in a family’s desire to buy a home. How is consumer confidence likely to be impacted post-election? The BTiG report states:

“A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.”

The overall number is sales is unlikely to be impacted in a significant way.

Bottom Line

The decision to buy or sell a home is almost always made based upon life events, getting married, growing family, job move, need to downsize etc. With that in mind, if interest rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market should remain strong for the remainder of this year and well into the next.