appraisals

What happens to the housing market after a presidential election year? Does the market really heat up like people say? What can we expect? Let’s take a look at some stats and kick around ideas. I’d love to hear your take in the comments.

UPCOMING SPEAKING GIGS:
11/19/24 Downtown Regional MLS Meeting Q&A 9am
11/20/24 Delia Real Estate Group (private I think)
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
12/18/24 Coldwell Banker Sierra Oaks
1/15/25 Mike & Joel Event (details TBA)
1/16/25 Sac Real Producers event (details TBA)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

A SUMMARY OF THIS POST:

1) Prices don’t just do one thing after an election year.

2) Rates don’t always go down after a presidential year.

3) On average, sales volume has been stronger locally during the spring after a presidential year, but there’s more to consider (see commentary).

4) Affordability is the bigger issue. Not the election.

PRICES AFTER AN ELECTION YEAR

An election year doesn’t alter the price trend that is already happening in the market. When looking at the median sales price in the United States as well as California and Sacramento (post-election years in orange), the trend is all over the place. Sometimes prices have been up, and other times they’ve been down. No matter what, an election year doesn’t come along and change the trend.

NOTE: I didn’t have time to adjust these visuals for inflation, but I do adjust below (it really doesn’t change the takeaway about elections).

WHAT ABOUT BEFORE THE ’90S?

I’m glad you asked. Instead of the median sales price, let’s look at the Freddie Mac Price Index in California and Sacramento from 1975 through 2024. The orange bars are the year after a presidential election, and whether looking at nominal prices or inflation-adjusted prices, the trend isn’t just one thing. Like I said, an election year doesn’t come along and alter the direction of prices.

MORTGAGE RATES AFTER AN ELECTION YEAR

Some people swear mortgage rates go down after an election, but it seems hit and miss when looking at the past thirteen elections. These visuals show the 30-year fixed rate since 1971 (FRED St Louis). Part of the struggle with interpretation may be rates have basically gone down since the early ’80s besides the past couple of years. So, it’s easy to say things like, “Bro, rates almost always go down after an election.” Well, yeah, that’s what rates have basically been doing when looking at the bigger trend. No mater what, mortgage rates are difficult to predict. Orange bars = year after election.

DOES THE FED ALWAYS CUT AFTER AN ELECTION?

First off, let’s remember the president doesn’t have the power to lower mortgage rates or the Fed Funds rate. With that said, I’m not trying to be a one-trick pony by saying there isn’t just one thing that happens, but the Fed doesn’t always slash rates after a presidential election (or before like some people say). The orange bars represent one year after a presidential election since 1954. By the way, the Fed cuts the Fed Funds Rate (not mortgage rates). That’s why they are two graphs on rates. Do you see any pattern?

ARE THERE MORE BUYERS AFTER AN ELECTION?

Okay, here’s where I think it gets interesting. We do technically see more volume after a presidential election year in the spring. Check out this visual where the year after in orange is clearly above the average in blue. However, there is more to the story.

WHAT IF WE REMOVE 2005 & 2009?

When we remove 2005 and 2009 from the data, other post-election years were lower than the norm. I wanted to show this because 2005 was one of the largest years of volume we’ve seen, and 2009 was also a massive year as foreclosures grew exponentially and a federal tax credit fueled more buyer demand. Look, I’m not trying to be a killjoy, but I’m not convinced saying the spring shows better volume after an election is really a supported narrative (even though it is technically true due to 2005 and 2009).

Here’s a way to show how much volume was happening in 2005 and 2009. Much higher than usual, right?

And here’s a chaotic visual to make one point. 2005 and 2009 were outlier years, and otherwise it’s sort of hit and miss for post-election years. In other words, sometimes they’re higher, and other times they’re lower.

STRONGER SPRING SEASON TECHNICALLY

Here’s one more way to look at it with bar charts. The year after an election (orange) tends to be higher than an election year (black) during the spring. It really does look like buyers jump back into the market after an election year, but 2005 and 2009 are playing a big role here in the stats. 

When removing 2005 and 2009, the trend looks different, right? All I’m saying is let’s be careful about saying something is a trend when a couple of monster years are pushing the stats up. Know what I’m saying?

Okay, one more visual to show annual volume instead of just monthly. I feel like this can help with context.

FALSE HOPE vs REAL HOPE

I realize a post like this might shatter a sense of hope about the market next year for those who are banking on the idea that things are simply going to heat up because it’s the year after an election. That’s not my intent at all. Yet, the reality is false hope doesn’t help anyone. My advice? Cultivate real hope however you can. Be optimistic about the future, surround yourself with forward-thinking people, and in terms of real estate, be realistic about the stats as you find buyers and sellers who have incentive to play the game ahead. If you work in real estate, put your head down and run toward the market instead of getting paralyzed with fear.

EXPECTATIONS FOR 2025

Some buyers may feel less uncertainty now that the election is decided (while others feel more), but these buyers still have to be able to afford the market, which is the bigger issue. With that said, I have heard from many real estate professionals that buyers have been waiting until the election is over, so we’ll see if there is something to that regardless of what historic stats show above. I don’t anticipate seeing noticeably more buyers next year unless there is a sharper change to affordability. Ultimately, the encouragement here is sellers aren’t quite as frozen as they’ve been, so I expect more sellers to list their homes in 2025 than 2024. Ultimately, buyers are more difficult to predict because what happens with mortgage rates ahead is such a massive factor. Locally, we’ve seen slightly more buyers this year, and I’m hopeful we’ll get more in 2025, but it’s going to still be far lower than a pre-2020 normal number. So much of buyer demand hinges on what happens with rates, inflation, and the economy. I’ll talk more about 2025 expectations in coming months, so let’s keep the conversation going.

FRESH STATS

I just pushed out October stats for nine counties here.

Thanks for being here.

Questions: What have you seen happen after a presidential election year? What are you hearing from buyers right now? I’d love to hear.

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