Dear Dave
My husband and I are thinking about selling our house. We were at a BBQ this past weekend and got on the topic with our friends and they told us that during the election cycle is one of the worst times to think about buying or selling a home. They’re not Realtors but have bought and sold a bunch of properties which has us thinking maybe they are right!? We wanted to know what your thoughts are as we’ve enjoyed reading your articles for a long time and appreciate your point of view and candor.
Sylvia & George
Fruita
Sylvia & George,
What a great and very relevant question. I have also heard that election years are not good for real estate and honestly always just kind of ran with that as a real estate “truth”, but your question encouraged me to dig in a little deeper and find out for myself if it was true or not. Thank you, because I was able to dig up some very interesting data that, in my mind, provides a very clear picture of not only election years (at least the back half of those years), but the following year as well. Let’s start with election years.
Data from BTIG indicates that indeed in the presidential election years there is a significant, a-typical, change in new home sales in October & November. Note this data was compiled from 1963-2019 so we have data from many election cycles. Forbes has also compiled information that shows 6 months prior to an election real estate sales in the greater Manhattan area underperformed non election year cycles. It is clear that the number of sales typically are lower leading up to a national election, but does that translate to “one of the worst times to think about buying or selling a home”?
Interestingly one of the major factors in determining if it’s a good time to “buy” is based on interest rates. If interest rates are going down, then typically it’s a good time to buy and sell. Falling interest rates generally encourage more buyers to climb into the market, thus increasing demand…..which in turn should lead to more sales. Below is mortgage rate information from Freddie Mac (federal home loan mortgage corp) over the past 11 election cycles and you will see mortgage rates actually declined leading up to 8 of the past 11 Presidential elections. In theory lower interest rates should positively impact demand, but that has not proven to be the case during election years.
So, we can see that leading up to presidential elections fewer properties are sold while interest rates almost always improve! So maybe not the best time to sell, but historically it’s a good time to buy, as interest rates decrease. Next week we will look at what happens AFTER the elections and explore if it matters which party wins the White House! See you next week.