The pandemic, the civil unrest and the upcoming election has made 2020 a stressful and chaotic year for everyone. The economy, for the most part, is being propped up by the Federal Reserve, while the little guy is waiting on bated breath to see if the government will pass another stimulus package before the election.
With so much riding on this election, Homelight asked 1,000 top-rated real estate agents to participate in the 2020 Q3 survey. In that survey, the agents were asked to share their insight regarding how the election will affect the housing market. Here are their concerns.
Declining housing prices
Real estate typically flourishes when it’s an election year, as housing prices will increase rather slowly. The year before the election, housing prices usually increase by 6%. During the election year itself, prices increase by 4.5% and the year after the election, prices rise by 5.3%, as per the California Realtors Association.
An exception to the rule
Washington DC is an exception to the rule, because in previous election years, DC housing prices typically increase by 12%. But in the following year, home prices typically increase by an additional 10%.
New president > current president?
Change is always scary, whether it be switching hair stylists or a new president taking office. Buyers are especially nervous to make big purchases like buying property. Princeton economist Brandeis-Wrone and co-author, Jee-Kwang Park, conducted a study that revealed why, exactly, people are nervous about who will take office: differing policies between the candidates and how close the candidates are in the polls.
Real estate credits, deductions and tax rates may change
In the Q3 survey, 25.7% of participating agents believe homeownership tax breaks are going to be a big indicator about the future of the housing market. Under the Trump administration, the Tax Cuts and Jobs Act was a huge benefit for homeowners. However, a change of power puts the tax deduction at risk of being eliminated or altered in a way that is unfavorable to homeowners.
Buyers lack confidence in the economy
There’s no denying that our economy is on shaky ground, but an incredible amount of real estate agents (92% to be exact) are seeing a booming seller’s market in their area. As promising as this may be, buyers are worried about the economy and whether or not they’ll have the income necessary to buy. However, if the economy improves under a new president, it is likely that buyers will become more active.
What’s truly interesting is that there was a substantial increase in the seller’s market rose by 37% between 2019 and 2020. It increased so much, it rose higher than the 77% it was before the pandemic in February.
The survey reveals that 87% of agents believe this increase in activity is due to the limited number of available houses on the market. With that said, 39% of them say the activity level will remain the same, whereas 33% believe it will improve over the next six months.
What candidate is better for the housing market?
As much as we’d like to say that one candidate would be better for the housing market over the other, we can’t. There’s no real way in knowing how the turnout will be, even though 52% of agents believe that if President Trump wins a second term, the market will flourish.
The real indication about how the housing market will fare is in federal legislation and the policies that affect residential real estate the most. These policies include: buyer’s access to affordable housing (27.7%), tax breaks and incentives for homeowners (25.7%) and fair housing for racially diverse, yet equal, neighborhoods (9.8%).