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4 Reasons Why the Election Won’t Affect the Housing Market

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4 Reasons Why the Election Won’t Affect the Housing Market

Caroline Gosselin

Caroline Gosselin is the CEO and Team Leader of the Gosselin Group at Prominent Properties Sotheby’s International Realty.  Caroline’s passio...

Caroline Gosselin is the CEO and Team Leader of the Gosselin Group at Prominent Properties Sotheby’s International Realty.  Caroline’s passio...

Nov 4 5 minutes read

The election or re-election of a President this week will have a major impact on many aspects of life in the United States, but the residential real estate market will NOT be one of them.

Analysts will try to measure the impact feasible changes in regulations might have on housing, the effect of a possible first-time buyer program, and any number of other situations based on who wins. However, we agree with Steve Harvey from Keeping Current Matters that the housing market will remain strong for the next 18-24 months for four reasons:


1. Demand Is Strong among Millennials

The nation’s largest generation began entering the housing market last year as they reached the age to marry and have children – two key drivers of homeownership. COVID accelerated this. As the Wall Street Journal recently reported:

“Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.”


2. Mortgage Rates Are Historically Low

All-time low interest rates are also driving demand across all generations. Strong demand created by these low rates has countered other economic disruptions such as the current global pandemic and record unemployment.

In addition, Freddie Mac just forecasted mortgage rates to remain low through next year:

“One of the main drivers of the strong housing recovery is historically low mortgage interest rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”

We encourage you to reach out to our trusted Mortgage Lender, Mark Yecies of Sunquest Funding for any advice and help regarding applying for a mortgage or refinancing. 


3. Prices are Continuing to Appreciate

The continued lack of supply of existing homes for sale coupled with the huge surge in buyer demand has most experts forecasting strong price appreciation over the next twelve months. We are certainly seeing this in our market  - the NJ suburbs 30 mins to 1 hour of New York City.


4. Historic Trends Point to Sales Staying On Track after the Elections

Though it’s true that the market slows slightly in November when it’s a Presidential election year, the pace returns quickly. Here’s an explanation as to why from the Homebuilding Industry Report by BTIG:

“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty. This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”

Ali Wolf, Chief Economist for Meyers Research, also notes:

“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year as long as the economy stays on track.”


Bottom Line

There’s no doubt this is one of the most contentious presidential elections in our nation’s history. The outcome will have a major impact on many sectors of the economy. However, as Matthew Speakman, an economist at Zillow, explained last week:

“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market – which has basically withstood every pandemic-related challenge to this point – will continue its strong momentum in the months to come.”

Want to know how all of this applies to your personal situation?  Schedule a complimentary and confidential consultation: www.thegosselingroup.com/schedule


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