Will the next election be a vote of confidence for real estate?
The most powerful market forces are outside presidential control, experts say, but the 2024 election could bring either “confidence or confusion.”
Key points:
- During election years, consumers often take stock of their economic situation, which can include their prospects for buying a home.
- Inventory and interest rates will likely remain the biggest considerations for would-be buyers, and a president’s influence over such market factors is limited.
- Still, the winner of the next election will likely be tackling housing issues — but expect different approaches depending on who’s in office.
The 2024 presidential election season is upon us, and that has some agents and brokers wondering how the outcome could affect the housing market — and their business.
Election cycles are often a time when consumers assess their prospects for buying a home. This year, the election could influence everything from interest rates to the supply of affordable housing, which a Redfin survey found was one of the top concerns of Americans.
Ilan Bracha, founder of real estate investment firm IB Global, told Real Estate News that this year's election could cause "confidence — or confusion" in the market.
Both investors and average homebuyers may be inspired to buy depending on who wins, he said. However, Bracha predicted the election would result in few market-level changes, since they are largely outside the control of an elected president.
"Either way, we need to bring the confidence back," Bracha said. "And that's what agents are supposed to watch for."
Can the president boost housing inventory?
One area where agents and brokers are still searching for clarity is inventory, Bracha said. The number of home sales in 2023 was the lowest in nearly 30 years, and although supply is ticking up slightly, it remains "historically low," according to Redfin data. The imbalance between inventory and buyer demand continues to push home prices up, causing chronic affordability issues for many Americans.
"We are in a very low market, and that doesn't seem likely to change overnight," Bracha said.
While the winner of the election can't single-handedly create more inventory, presidents can offer up policies and incentives to boost supply. In March, for example, the Biden administration unveiled a package of housing proposals, including $20 billion in grants intended to spur new home construction.
Donald Trump, the presumptive Republican nominee, has offered few specific housing policy proposals, but a recent story in Dwell pointed to a 2023 campaign video in which Trump proposes a contest to build new cities on federal lands, and promises an initiative to lower the cost of building a single-family home.
Mortgage rates, the Fed, and the executive branch
Mortgage interest rates are another indicator being closely watched by agents and brokers. Rates have been hovering around 7% for weeks and haven't fallen below 6% since September 2022. The Federal Reserve has said it is not yet confident that inflation is moving in the right direction, leading to concern among some market watchers that interest rates could rise again in the short-term.
The Fed has long been an independent body, setting monetary policy based on economic data rather than presidential mandates. But that could change, according to a recent Wall Street Journal story suggesting that Trump allies are drafting plans to allow executive influence over the Fed.
Should Trump win a second term, his administration may try to steer the direction of the Federal Reserve, the Journal notes.
The election is only one piece of the puzzle
Realtor.com economist Danielle Hale thinks the election will have a relatively muted effect on the real estate market, because the presidency is just one piece of the macroeconomic puzzle.
While the election could shift consumers' expectations and potentially affect their economic outlook as well, Hale acknowledged, she believes those effects will be temporary.
"I think [the election] will be a short-term phenomenon, as opposed to maybe something more lasting," Hale said. "Ultimately, it's going to depend on what actually happens to long-term economic growth."