If you have been on the fence about making a real estate transaction in 2016, this may have been a good decision. Why? 2016 is an election year and buying and selling a home in an election year has been historically slightly harder than non-election years.
This is due to the uncertainty that any election year brings. This particular year the uncertainty was heightened with the constant bombardment of the vastly different approaches being relayed to us every moment of the day on more media sources than we have ever had before. It has been a non-stop barrage of uncertainty about who our Country’s leader will be.
Fewer transactions are made during election years.
Although consumer spending looks good as a whole during 2016, the uncertainty has delayed the purchase of larger, more expensive items. We have seen both boat and car sales slightly down this year despite a rebounding economy.
Homes are not any different. People feel more comfortable about big purchases after the election than before the election. And, it does not matter who was elected. This is just a matter of certainty versus uncertainty!
Do elections actually impact sales?
In 2015, the British Journal of Political Science published a paper written by Princeton economist Brandice Canes-Wrone and her co-author Jee-Kwang Park. They used home sales data that was collected between 1999 and 2006 from a real estate website to determine how home sales performed during 73 gubernatorial elections in 35 states. The research showed that during election years, home sales dropped from two-tenths to three-tenths of a percent, depending upon the state.
Other studies discovered similar findings. In 2012, Movoto.com showed that the housing market was affected by presidential elections. Using data from the California Realtors Association (CAR), they found that housing prices increased 1.5% less than in the year right before the elections, and 0.8% less than in the year right after the election. Small percentages on large numbers can really make a big difference over time.
2017 predictions on real estate values?
The National Association of Realtors, Mortgage Bankers Association, Fannie Mae, and Freddie Mac all say that there will be a large increase in numbers of home sales in 2017. Most of the increase in home purchases and sales in 2017 will be due to Generation Y’ers continuing to get back into the real estate market. As a result, price increases range between 1% and 3% depending on the unemployment rates and local markets of your area.
The truth is that there is still a shortage of real estate out there in most markets. If you are a seller, you are in a great position. If you are a buyer, there may be a few more deals than before. Now that we are past the 2016 election, we should all fee more certain about the direction our country is going. And, certainty always helps the real estate market!