Over the last year, we have witnessed the most unpredictable presidential race since 1968.
Surveys and reports have suggested this election has created an increasingly “pessimistic” housing market. In February of this year, 15% of homeowners felt the election would hurt the real estate market. By July, that number jumped to 27%.
Regardless of the results of the election, both Congress and the President’s staff are expected to see significant change.
With the presidential race finally ending, and the election occurring on Tuesday, will this year’s pessimism, political unpredictability, and potential shake-up of Washington, D.C. create a commensurate impact on the Washington, D.C. housing market?
Do Elections Historically Impact Housing Markets?
David Howell of the Washington Post recently ran the numbers for how a big shake-up in politics would impact the Washington, D.C. housing market and came to some interesting conclusions.
He first noted that even when a change in leadership creates a substantial volume of new appointments, “many of those who fill those seats already live here.” Changes in leadership in Washington, D.C. usually tend to result in the reshuffling of existing residents, and not in a huge influx of new residents.
He then ran the numbers, and argued a big political shake-up following the election would only generate 2,560 new home sales, or a roughly 5% increase in home sales over last year’s numbers.
Finally, he presented data on how previous elections impacted home sales. Since 2000, home sales roughly saw a -5%—+10% change in the year following an election (not counting the big dip and rebound surrounding the housing crisis in 2008-2010).
This data is corroborated by another recent study put out by the National Association of Realtors, which found home sales in the Washington Metro Area rose an average of 10% in the year after elections.
Looking at this historical data, the housing market showed no preference for, or aversion to, either political party. The markets’ increases and decreases did not correlate to whether Democrats or Republicans won the presidency or gained a majority in Congress. Despite claims to increase or cut government jobs, neither party has changed government employment trends.
Will This Election Act as an Outlier in the Washington, D.C. Market?
A case can be made that this election feels more disruptive than an average election and it might result in changes that lie outside of historical data. On the other hand, as TransWestern’s Trendlines points out, this is not the first presidential race that created the anticipation of “cataclysmic changes” and in the past these cataclysmic changes “often did not pan out.”
Reviewing this year’s market data, there is no indication that this unique election has produced, or will produce, a distinctive impact on the market. According to Yardi Matrix’s Fall 2016 Outlook, the markets have so far seen no impact from the election. Regardless of which candidates win, the results are likely to result in political gridlock that may freeze policy changes. With no housing crisis in play, there is little political desire or will to push through new housing policy.
Inman has also found, “the data proves (so far) that the housing market as a whole is not reacting negatively to crazy election drama we’re having in the U.S.,” pointing out that sales are up nationally this year over last year, despite any pessimism home owners may state about the market.
The same could be said for the Washington, D.C. real estate market specifically. We have seen sales and prices rise all year. This August we saw home sales and contracts reach their highest August level in nearly a decade.
Expectations for the Housing Market Post-Election
Once you look beyond the headlines, and review the data, it becomes clear that even the most contentious U.S. elections have little impact on Washington, D.C.’s real estate market—and so far the 2016 elections have not been an exception.
To discuss this data, our conclusions, or any facet of the potential impact of the coming election on the Washington, D.C. real estate market, contact Evergreen Private Finance today. Call us at (202) 713-9072 or email us at [email protected].
Written by: Evergreen Private Finance