How will the 2016 Presidential Election Affect Real Estate?
Hillary Clinton, Bernie Sanders, Donald Trump or Ted Cruz, who will eventually find their way into the White House? Every four years we experience a sense of uneasiness leading up to presidential elections. Generally, the gap between the financial policies held by the Democratic and Republican parties have grown wider over the years, and now at its widest it’s been in decades. The differences in policy and the the uncertainty of the election result had some impact on Real Estate across the nation.
The range between policies promoted by Bernie Sanders or Hillary Clinton compared with that of Donald Trump couldn’t be greater. Are taxpayers going to endorse free education, or are we going to raise taxes on imported products to entice US corporations to keep their operations (and jobs) in the US? How is healthcare, social security, and the global currency war going to be dealt with? There are many hot-button topics, and the devil is always in the details. With so many potentially unforeseen side effects it’s no wonder people tend to be tense prior to elections, and especially for this nearing election.
So how will this upcoming presidential election affect the real estate market? According to David Cross in an article published in the Huffington Post, the value of California homes tend to increase at a slower pace during election years. In his research (with data provided by the California Association of Realtors) the three years surrounding the presidential election (being those before, during and after), it was found that historically:
- The year before an election home prices rose by 6%.
- During the election year home prices rose by 4.5%.
- After the election year home prices rose by 5.3%.
Walter Molony of the National Association of Realtors had a different take on the “election year slump” by stating, “We’ve observed no correlation between levels of home sales and an election year. The market responds to a wide range of economic factors, including jobs, interest rates and consumer confidence.” However, it’s believed by others in real estate and associated industries that Presidential election years are stressful for the American people. People are less likely to take chances in times of uncertainty, to include making large purchases such as a new house. After all, the sale and purchase of a home is a big decision and people have to feel confident in the financial environment before committing themselves to either buying or selling.
A Harris Poll back in 2012 for mortgagemarvel.com showed that 25% of Americans surveyed would prefer to know who their next president would be before putting a down payment on a house. Among the 2,570 U.S. adults surveyed, 13% said they would definitely delay a home purchase until after the election; another 12% said the uncertainty might cause them to delay their purchase. But taking this into consideration means that a solid 75% of those polled were less affected or even unaffected by an upcoming election.
So historically how have home sales fared in Sun City Palm Desert during election years? The experts at the Keller Williams Jelmberg Team pulled data from the last four election cycles and indeed, the results don’t seem to indicate a correlation. The year over year median price changes don’t confirm the trend outlined by Cross’s findings for the state.
As we dig into the election year data a little deeper the only story being told is that of the 2005 real estate bubble that we all want to forget.
2004 (Bush II) – Almost at the height of the real estate bubble. The most homes ever sold in the community (432 units), and the median home price reached $370K (4th highest in the history of the community). Steady growth in both sales volume and median price were enjoyed the years leading up to the election, and we all know the eventual peak (2005) and ensuing free fall (starting 2006) in the real estate market that proceeded.
2008 (Obama) – Heading into the trough of the real estate crash, median home prices fell to $310K, and a whopping 230 fewer units sold compared to 2004 when the market was almost at it’s peak.
2012 – (Obama) – 2011 was a year everyone was glad to see in the rear view mirror as the median home price ($270K) fell to a level that hadn’t been seen in ten years. The coming election year brought with it the beginning of the market’s rebound which has continued since.
“25% of Americans surveyed would prefer to know who their next president would be before putting a down payment on a house. ”
Josh Jelmberg from the Jelmberg Team had this to say about how the election effects home sales in Sun City Palm Desert:
“Although past elections haven’t effected Sun City homes sales directly, we believe this election year will have some impact when coupled with the decreased value of the Canadian dollar and the volatility in the stock market and global financial markets. You have probably already noticed the effects as the inventory has swelled to over 175 this year (currently 166). Don’t let this news get you down though, people are constantly moving to satisfy changes in their lifestyles. Whether it’s moving to the retirement community a buyer has always dreamed of, or moving closer to kids and grand-kids, the fact is that regardless of politics, policies, or financial market conditions, there are still buyers out there that desire to live in Sun City.
To help prove the point, we will share some additional stats with you. We have over 42 transactions sold in 2016, and will have over 3,000 unique visitors to our website and connect with over 200 buyers in this month alone. Our listings are getting incredibly focused exposure from this platform, and this is just a small piece of the overall marketing plan we implement for our clients. Our buyer’s agents are currently working with over 90 buyers that are within 90 days of making a purchase and our buyers love the easy search, beautiful big pictures and most up to date MLS information on our new website. So far this year in Sun City Palm Desert we have sold every one of our listings, except a new listing on Golden Pebble that went active four days ago (as of 3/16/16). The correct buyer for your home is out there!”
As the election draws to a close the fact remains that homes in Sun City Palm Desert are still very likely to sell despite the uncertainty of the election.