Published by FOX Business | February 26, 2024
Prior elections have coincided with eventful years from the pandemic and Brexit referendum, which caused prices to rise.
Real estate economists are sounding the alarm about how the upcoming presidential election this November could impact the housing market.
While the outcome could affect certain economic policies, the election cycle itself could cause some hesitation from buyers and sellers to jump into the market due to the uncertainty of what policies could be enacted, real estate economists tell FOX Business.
The current state of the housing market, Redfin Chief Economist Daryl Fairweather warned, could also potentially affect who gets elected this fall.
Housing affordability is a pain point as consumers contend with persisting inflation and high interest rates.
Last week, mortgage rates continued their upward trend this week, nearing 7%, exacerbating the affordability crisis. These high rates are not only dampening demand, but also limiting inventory. Sellers that locked in a low mortgage rate before the pandemic when interest rates were as low as 2.5% have been reluctant to sell.
Redfin Chief Economist Daryl Fairweather told FOX Business that the policies of a party in power can impact the affordability of homeownership.
For instance, Fairweather said that the president and Congress could enact tax reforms that affect housing, including changing the mortgage interest deduction, the capital gains exclusion, the property tax deduction or the income tax brackets.
“They can also fund down payment assistance programs and other housing affordability measures,” Fairweather said. “These changes can alter the incentives and affordability of homeownership for different segments of the population.”
Realtor.com Chief Economist Danielle Hale argued that prices have risen in past elections, but that was because they have coincided with eventful years impacting the economy.
“With the notable exception of 2008, home sales and prices have gone up in every prior election year, but the macroeconomy more than the election is the key driver,” Hale said.
She noted that recent elections have fallen on the backdrop of a global pandemic in 2020, the Brexit referendum in 2016, and a global financial crisis and recession in 2008.
In 2012, Hale also noted that there was grave uncertainty stemming from a fiscal cliff, major health care expansion review by the Supreme Court and an Eurozone debt crisis, alongside the very close U.S. presidential election.
