Traditionally, Presidential elections have not made much of a difference in the housing market. This one could be more impactful, according to a survey from Redfin.
That said, most insiders do not believe that, in the long term, it will significantly impact the market, although COVID-19-related issues could.
"We expect home sales to continue to grow this fall due to the coronavirus pandemic; we are forecasting more home sales in 2020 than in any year since 2006," Redfin reported.
Some findings of note from said survey:
- 22% of homebuyers and sellers (looking to buy/sell in the next 12 months) out of 1,400 surveyed said the presidential election is impacting their plans to buy or sell a home. That’s down from 32% in November 2019, according to a previous Redfin report. "The drop from last year is likely due to the pandemic, which seems to be outweighing the election as a factor for homebuyers and sellers," the researchers said.
- 13% of respondents said the election is making them more hesitant to buy or sell a home, down from 20% in November 2019.
- 9% of respondents said the election is making them less hesitant to buy or sell a home, down from 12% in November. "That’s unlikely to have a major impact on the housing market, partly because a portion of those people will probably buy and/or sell once the election has passed," Redfin reported.
- 65% of potential homebuyers and sellers said the upcoming presidential election isn’t impacting their plans, compared to 60% in November 2019.
- 75% of buyers and 50% of sellers say COVID-19 is impacting their plans this year.
- 43% of buyers said they’re planning to buy a home later than originally planned because of the pandemic, and 34% said they’re buying a home sooner than originally planned.
- 21% of sellers said the pandemic is delaying their selling plans, 19% said it’s accelerating their selling plans, and 10% said they’ve decided not to sell their home.
On the ground, agents aren't necessarily expecting a huge market shift due to the current battle for the White House.
“Almost all the buyers I work with ask how the election could impact their home purchase,” Pruitt said. “I don’t have a crystal ball, but presidential elections have never seemed to affect the housing market much in the six election cycles I’ve been a real estate agent. The pandemic is having a much bigger impact, with low mortgage rates motivating buyers who want more space to work from home.”
Although agents including Danielle Field from Louisville, Kentucky said some experiencing pre-election anxiety want to hold off.
“Some home sellers—and buyers, to a lesser extent—are delaying their plans because of all the stress and uncertainty in the world, including the divisiveness surrounding the presidential election,” said Field. “They don’t want to add one more stressful experience to their lives. I’m hopeful that once the election is over and there’s finally some certainty in this country, people will start putting their homes on the market again, creating more inventory for buyers.”
Past presidential elections have had "minimal correlation with U.S. home sales rising or falling, which squares with Redfin’s survey findings," Redfin reported. "Home sales rose by an average of just 0.4% in October and November of presidential election years compared with non-election years, according to a Redfin analysis of home sales going back to 1980, which includes 10 presidential elections and controls for other economic factors such as changes in mortgage rates. In the December of presidential election years—the month representing closed sales for offers made during November, the election month—home sales dropped by an average of 1.5%, followed by a 1.5% recovery in January."
Redfin noted that its survey is the result of the following methodology:
The analysis of elections’ impact on home sales is based on a TSLM forecast for monthly seasonally adjusted home sales from 1980 to 2020 across each metro where county records are available and nationally. The model predicts monthly home sales in each region, incorporating factors of previous trend, mortgage rates, consumer confidence, job growth, and a recession indicator. Then we estimate the expected effect on home sales during each October, November, December and January of presidential-election years. The average growth or decline in home sales noted above is the change that’s attributed to the election. For instance, if Redfin expects 500,000 home sales in the typical October, we expect 502,000 (0.4% more) in the October of a presidential election.