I read a statistic that every election year real estate sales drop 15 percent in October as buyers and sellers wait for the results of the election. This year is no different. As election day approaches, many buyers and sellers have asked me if they should delay their real estate decisions until the outcome is clear. Some hope that a new administration could bring favorable economic policies, while others believe the current administration’s continuity might create stability. However, the reality is that waiting for the election results may not offer the advantages you’re hoping for—and here’s why.
Change Doesn’t Happen Overnight
Regardless of whether the current administration remains in office or a new one takes over, it’s important to understand that major economic changes—especially those impacting housing—take time to implement. Even if a new president is elected in November, they don’t take office until January. From there, it takes months, even years, for new policies to be proposed, passed through Congress, and then enacted into law.
By waiting for the election, you might miss out on opportunities in the current market while betting on changes that may not have an immediate impact.
What Really Impacts Interest Rates?
Many prospective buyers and sellers believe the election will drastically affect mortgage rates. In reality, interest rates are influenced by a wide variety of factors that are mostly out of a president’s direct control.
1. Federal Reserve Policies: The Federal Reserve plays a significant role in setting the tone for interest rates. The Fed adjusts its benchmark interest rate in response to inflation, employment data, and the overall health of the economy, not political outcomes.
2. Inflation: When inflation is high, interest rates tend to rise. The Fed increases rates to control inflation, making borrowing more expensive. Conversely, if inflation is low, interest rates tend to drop.
3. Bond Market: Mortgage rates are often closely tied to the 10-year Treasury bond yield. When investors move their money into safer investments (like bonds) due to uncertainty in the market, bond yields fall, which can bring down mortgage rates.
4. Global Economic Events: Global factors such as trade wars, oil prices, or even pandemics can have a significant impact on the U.S. economy and, subsequently, interest rates. These events can cause investors to act conservatively, affecting bond markets and mortgage rates.
A Look at Potential Housing Policies: Trump vs. Harris
If you’re waiting for the election to make your move, it’s worth understanding the potential housing policies of both candidates—incumbent Vice President Kamala Harris and former President Donald Trump—as they may give you an idea of what’s to come, even though any changes won’t happen immediately.
Trump’s Housing Policies
Former President Trump’s approach to housing during his administration focused largely on deregulation and limiting federal involvement in the housing market. Some of the key aspects of his housing policies include:
- Deregulation: Trump sought to reduce regulations in the housing market, believing that less government intervention would increase housing supply and lower costs. This included reducing zoning regulations and limiting environmental protections that could slow development.
- Privatization of Fannie Mae and Freddie Mac: Trump’s administration explored privatizing Fannie Mae and Freddie Mac, two government-sponsored entities that back a large share of U.S. mortgages. The goal was to reduce the government’s role in housing finance and encourage more private competition, which could affect mortgage rates and availability of loans in the future.
- Opportunity Zones: Trump created “Opportunity Zones” to encourage investment in economically distressed communities. Investors were offered tax incentives to develop housing and businesses in these areas, which increased affordable housing development in select regions.
Harris’s Housing Policies
Vice President Kamala Harris’s housing platform during her campaigns emphasized addressing housing affordability, fair housing, and boosting homeownership for marginalized communities. If re-elected, her policies may continue to focus on:
- Rent Relief and Housing Affordability: Harris has long been an advocate for rent relief and affordable housing. She supports expanding federal housing assistance programs, including rent subsidies and tax credits for middle- and lower-income families.
- First-Time Homebuyer Tax Credit: Harris supports reinstating a tax credit for first-time homebuyers, which would help lower the barriers to homeownership for younger and lower-income buyers. This tax credit could offer up to $15,000 to new buyers, potentially boosting home sales among those previously priced out of the market.
Why You Shouldn’t Wait to Buy or Sell
While there’s always uncertainty around an election, real estate markets are driven by supply and demand, interest rates, and other economic factors that are not immediately affected by election results. If you’re considering buying or selling:
- Less Competition: Buyers are waiting to jump back in after the election. Why wait for the croud?
- Market Opportunities: Depending on your local market, you may be in a position to take advantage of less competition during this uncertain time. Buyers and sellers who wait may find themselves up against more competition post-election.
- Long-Term Investments: Real estate is typically a long-term investment. The election might bring short-term economic shifts, but historically, housing markets have remained strong over time. The key is finding a home that meets your needs, not timing the political climate.
So waiting for the election might not make sense
Elections bring about feelings of uncertainty, but waiting for a change in administration is unlikely to have an immediate effect on your real estate decisions. Instead, focus on your current financial situation, interest rates, and the market conditions in your area. By making a well-informed decision now, you can potentially take advantage of the opportunities available to you on your timeline.
If you have questions about how the current market is affecting your home-buying or selling process, I’m here to help with expert advice and guidance tailored to your needs. Let’s discuss your goals and find the right time to make your move!