The Impact of the 2024 Presidential Election on Real Estate
Presidential elections in the United States have a significant impact on various industries, including real estate. These elections encompass not only the presidential race but also elections for federal senators and congressmen, gubernatorial elections in most states, and local city and county races. This broad range of political activity can lead to policy changes at multiple levels of government, affecting real estate prices, home sales, and property-related taxes.
Historical Trends in Election Years: Historically, presidential election years tend to witness slower home price appreciation. Research conducted by the California Realtors Association revealed that home prices rose between 4.5% - 6% in the year before elections. However, it's essential to note that regional variations can occur, as seen in Southern Utah, where home prices only decreased by approximately 4% from September 2022 to September 2023 in Washington County (depending on the source).
While changes in home prices during election years are not always substantial, they have indicated a pattern of slower price growth, making it a potentially favorable time for homebuyers. Nonetheless, there are elements of uncertainty, such as interest rates, that can complicate the real estate landscape.
The uncertainty associated with a new presidential term can make the real estate market even more challenging. Buyers may be hesitant to invest in real estate when there's a transition of power. Factors such as a closely contested presidential race and policy differences between parties can contribute to a "pre-election decline" in home sales.
Uncertainty and Interest Rates: One significant factor affecting the market is interest rates. The Federal Reserve's stance on interest rates plays a pivotal role in mortgage rates. Rates increased in 2023 due in part to the Fed's efforts to control inflation. While predictions suggest that rates may ease slightly in 2024, there's ongoing uncertainty about this. There were a lot of similar predictions for Q3 and Q4 of this year and those predictions never materialized. Still, at some point the Fed's campaign against inflation may soon conclude, leading to potential rate reductions.
Market Outlook in 2024: The combination of high mortgage rates, steep home prices, and low inventory levels in 2024 presents challenges for both buyers and sellers. If rates were in fact to cool market activity could heat up. To help make the best prediction possible I would suggest considering the following factors:
1. Mortgage Rates: If the Federal Reserve is able to control inflation, mortgage rates may decrease, potentially driving market activity.
2. Home Prices: Home prices are expected to rise around 3 to 4 percent in 2024. However, this is closely tied to housing inventory, which is expected to remain constrained. Sellers may be reluctant to give up low-interest rates, keeping inventory tight.
3. Inventory Levels: The current shortage of “affordable” inventory suggests that the market may not shift to a buyer's market anytime soon. Demand is likely to continue to exceed supply. As I have said before, Southern Utah is always in demand. This is evident with homes still selling even at 8% interest.
Utilize Real Estate Agents: Given the complexities and challenges of the 2024 housing market, it's advisable for both buyers and sellers to seek the guidance of experienced local real estate agents. Myself and others can provide valuable insights and assist in navigating the real estate landscape during this period of uncertainty. I would suggest getting others' opinions as well to make the best-informed decisions possible.
Conclusion: I would expect the 2024 presidential election to have significant implications for the real estate market. There was a lot of debate around the 2016 and 2020 elections, I think the same will be true in 2024. While historical trends suggest a slower rate of home price appreciation during election years, the broader economic context, including factors like interest rates and housing inventory, will play a crucial role in shaping the real estate landscape in the coming year. Buyers and sellers should remain vigilant, seek professional guidance, and be ready to adapt to the dynamic conditions of the 2024 housing market.
Real estate market trends, Home price appreciation, Presidential election impact, Housing affordability, Mortgage rates, Property tax deductions, Real estate market analysis, Local real estate insights, 2024 election effects, Homebuying strategies, Housing inventory, Real estate agents, Market activity, Buyer's market, Seller's market, Property investment, Property tax rates, Real estate market forecast, Regional variations, Home sales trends, Housing demand, Market dynamics, Inflation control measures, Economic indicators, Homeownership opportunities