Tomorrow is Election Day and many homeowners, potential buyers and real estate agents are wondering how the outcome might affect the real estate market. While we don’t have a crystal ball, and can’t predict with certainty what will happen, we can take clues from the past and the analysis of market experts to get an idea of what we might expect.

Earlier this summer, mortgage rates started falling as investors expected the Federal Reserve to lower interest rates due to concerns about the economy—especially rising unemployment. By mid-September, we saw mortgage rates drop to their lowest point in two years. But the recent positive news on inflation and the labor market is causing those rates to start climbing again.

Short-Term Effects: A Temporary Slowdown

There have been some consistent effects in the past. One of them is that presidential elections tend to create a short-term slowdown in the housing market. This is mainly due to the uncertainty that comes with potential policy changes. Here's what we typically see:

• Decreased Home Sales: Studies have shown that in past election years, the median number of new home sales dropped by about 15% between October and November, compared to a 9.8% decrease in non-election years.

• Slower Price Growth: Home prices tend to rise more slowly during election years. Research has indicated that home prices rose by 6% in the year before elections, 4.5% during election years, and 5.3% in the year after elections.

• Buyer Hesitation: Many potential buyers may choose to wait until after the election to make major purchasing decisions, leading to a temporary dip in demand.

Long-Term Impacts: Policy Matters

The long-term effects on the real estate market will depend on the policies the winning candidates implements. So, let’s take a look at what some of the analysts think may happen.
If Donald Trump Wins:

• A focus on deregulation and tax cuts could potentially fuel economic growth and increase disposable income, which might boost demand for homes

• There could be a push for lower interest rates, which could stimulate refinancing activities and home sales

  .

If Kamala Harris Wins:

• There might be a continuation of the current administration's policies, including efforts to increase the housing supply and address affordability issues

• Potential implementation of federal rent control measures and increased regulation of corporate landlords.

The Role of Consumer Confidence

Regardless of who wins, consumer confidence in the economy plays a major role in the housing market. When consumers feel optimistic about the economy, they're more likely to make major purchases like homes

.

Local Market Variations

And, of course, the impact of the election can vary significantly across different local markets. Research has shown that "swing" counties, where the majority vote frequently switches between parties, are especially sensitive to changes in local real estate prices—which is good news for Arkansans, since we are not in a swing State and don’t really have swing counties. So the market should remain more steady here than in other locations.

The Bottom Line

While presidential elections can result in short-term uncertainty in the real estate market, it's important to remember that housing decisions are more driven by personal circumstances than by political events.

Things like job changes, growing families, and local market conditions usually play a much larger role when it comes to home buying and home selling decisions.

It's wise to stay informed about potential policy changes that could affect the housing market. But, we don’t recommend basing your real estate decisions on election outcomes alone. We won’t tell you how to vote, but we do encourage you to vote. It’s a right and a responsibility of citizenship.

Remember, if you have any questions about buying or selling a home, or the real estate market in general, don’t hesitate to reach out to us at Live.Love.Arkansas. You can reach us at (479) 747-2466. We will be happy to provide insights specific to your market and personal situation.