The US Presidential Elections and Its Impact on the Property Market

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The US Presidential Elections and Its Impact on the Property Market

March 22, 2016

 We are in the middle of one of the most contentious Presidential elections in the United States and things are only going to get more intense as we get closer to November, 2016. A lot has been talked about the impact of the U.S. Presidential race on the national economy, but there’s not a lot of research available on how it impacts the property market in the country.

So does the race for the White House means for you if you looking to sell your overseas property in the USA? First, it is important to understand that the US Presidential elections, more than anything else, reflects the general mood in the U.S. The fact that there has been so much negativity in this election is a reflection of the fact that the common folks in the USA do not feel too confident about what the future holds in prospect for them.

The residential property market in any country does well when there is a general wave of confidence about the economy. If there is a high unemployment rate in the country, if the wages are stagnant, if consumer spending is low and if the economic growth slows down, this certainly has a negative impact on the real estate market – and influences the tone in the Presidential elections as well.

There was a research paper published in the British Journal of Political Science by economists Brandice Canes-Wrone and Jee-Kwang Park in 2014 that analysed the impact of a Presidential election in the US over the property market in the country. The authors have noticed a great difference in the data related to home sales during the time of the U.S. Presidential election compared to the gubernatorial elections (elections fought for the state governorships).

They say that the data from 1999 to 2006 in thirty five states in the US indicates that the real estate marketed was affected more by the Presidential elections than by the gubernatorial races. Indeed, they say that home sales tend to decline during the years when a Presidential race is in progress, while they increase by 1.5% during non-election years preceding and following the elections.

The conclusion is quite obvious – the real estate market in the U.S. has always been affected by the uncertainty around the Presidential elections. Consumers just don’t feel confident enough during this time to make large purchases, as they are worried about the future of their country and the direction in which it is headed at.

So most people in the U.S. are under a lot of stress during the Presidential race and they put off major decisions such as buying or selling a property until after the elections are over and a clear picture emerges. 

What about the mortgage rates? Brad Yzerman of  HomeLoanArtist.com says that “there is no historical evidence that supports mortgage rate consistently go either up or down in a presidential election year.”  There are many loan brokers who use the fear of uncertainty over mortgage rates during the election year to force people into refinancing their loans; so you should be aware of such scare tactics.

 And what does this mean for you? Should you sell your property in the USA during the election year? Or should you hold off the sale till a new President has been elected?

It’s hard to say and real estate experts have different opinions on this. But generally the rental market outperforms the residential property market during an election year as people are more likely to sign up new rental agreements than buy a new home.