The election won’t cause a prolonged market slowdown. Here’s why.

Here are the four reasons why the recent election won’t dampen our strong housing market:

1. Demand is strong, particularly with millennials. Though you may not realize it, millennials are the largest generation in America, and they've been entering the housing market lately. They’ve reached the age to marry and have children—the two key drivers of homeownership. As you can see from the graph at 1:18 in the video above, the National Association of Home Builders has reported that the share of millennials planning to buy homes in the next 12 months rose 22% year over year. As this new generation of homebuyers grows in the market, they’ll take advantage of opportunities and continue to drive demand for inventory. 

2. Mortgage rates are historically low. As you may have heard, these historically low rates are also driving demand across all buyer demographics. This demand has countered other economic disruptions such as the COVID shutdowns, unemployment increase, and the election. With today’s rates, it’s almost $200 cheaper per month to buy a $300,000 home than it was a decade ago. Additionally, the Federal Reserve has signaled mortgage rates to remain low throughout the remainder of this year and 2021, which means they’re expected to remain unchanged at roughly 3%. It will continue to be more affordable than ever to own a home, which will keep demand high. 

The year after a presidential election is often the best year of the four-year cycle.

3. Prices continue to appreciate. Due to the low supply of homes, there is upward pressure on prices. The reason why boils down to the simple economics of supply and demand. When there is high demand for a product and a low supply of it, consumers will pay more. That’s what’s happening in our market. The housing shortage is also causing bidding wars, which is driving price points higher. Experts project prices to continue appreciating for the next 12 months. (For a closer look at these projections, refer to the graph at 3:33 in the video).

4. History tells us the market will remain strong. Although it’s true that the market slows slightly in November during an election year, the normal pace usually returns quickly. Experts who’ve researched market trends every election cycle tell us not to worry because history suggests that a market slowdown is largely contained within November. In fact, the year after a presidential election is often the best year of the four-year cycle. This tells us that demand for housing is not lost because of election uncertainty. Rather, it simply gets pushed to the following year as long as the economy stays on track. 

The bottom line is that the election could have an impact on various sectors of the economy, but recent trends tell us that the housing market will carry strong momentum into the year to come. If you have questions about our housing market or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’d love to speak with you.