Do Elections Shape Housing?
We are exactly one week from the much anticipated election day, a milestone many Americans are looking forward to. For one reason, some buyers, sellers, and even real estate agents believe an election year plays a part in the housing market. A recent Press Democrat article reads, “Sonoma County’s housing market sees third straight drop in new listings.” The article goes on to speculate why that might be the case, this being an election year included among the reasons, “Sellers this year also seem affected by doubts on such matters as the outcome of the U.S. presidential election…”
So is there any truth to the general consensus that an election year affects housing?
In a recent C.A.R. analysis of home sales dating back to 1990, C.A.R. found that the average change in home sales during an election year does not follow a particular pattern. Notably, sales growth is rarely negative during an election year, and there is no evidence of a systematic negative impact on homes sales or prices stemming from election season. In fact, C.A.R. found that growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points.
On a monthly basis since 1990, California home sales contracted by roughly 2 percent during the last four months of the year. However, during the last 5 election cycles, sales in the final months of the year picked up, rising by 5.3 percent on average compared with 1.8 percent during non-election years.
Source: How Elections Shape Housing, California Real Estate August 2016
Source: Terra Firma