How the Elections Effect Real Estate.
So what happens when people have doubt in the market? It slows down. As simple as that. Does that mean the market will come to a halt. The answer is simple, No. People will always be buying and selling real estate. Will you be one of them? Will it be your neighbor or friend? Even in uncertain times, people buy and sell homes. Go back to 2008 when the real estate market fell. People were still buying homes. Unfortunately we do not have a crystal ball so you need to ask yourself if it is a good time for you.
“If stocks rise between July 31 and October 31, then people are generally of the mind that the incumbent party will win. If equities fall, then the thinking is that a new party will take over”, said Sam Stovall, managing director of U.S. equity strategy for S&P Capital IQ. Again, it relates to uncertainty. “This actually plays out in the polls”, said Stovall. “In 82 percent of the times that markets have climbed during August and October, the incumbent party has won. In 86 percent of the times the market has been down, the replacement party has won.”
According to this study, The Average Increase in a Home Price
For the three years surrounding the presidential election (the year before, during, and after), we noticed that:
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%
1.5% MIGHT NOT SEEM LIKE A LOT, BUT LET’S PLACE IT IN PERSPECTIVE.
In 2011, the average sales price of an existing home was $166,000. Normally your house would expect to gain $9,462 in price, but because of the election you gain only $7,462. That’s $2,000 you effectively lost because of the election.
So, what does this mean for buyers: You may have less competition to compete with. Many buyers may hold off their purchase until the new president is elected and their confidence in the market increases.
For sellers: If you need to sell, keep in mind, many buyers will be holding off their large purchases for more certain times so you need to price your home accordingly and competitive.
If you are thinking or buying or selling a home in 2016, please give me a call to discuss your situation and options.