How Do Presidential Elections Impact the Housing Market?
How Do Presidential Elections Impact the Housing Market?
With the 2024 Presidential election around the corner, many homebuyers, sellers, and investors are curious about how elections influence the housing market. Questions about interest rates, home prices, and sales activity are particularly relevant as potential buyers and sellers navigate a market already impacted by high interest rates and low inventory. Let’s break down some common questions about election-year real estate trends and explore how these might specifically impact sought-after areas like Los Angeles and Beverly Hills, CA.
Does an Election Slow Down the Housing Market?
Answer: Generally, election years bring a temporary slowdown in home sales. In a typical year, sales decline by about 9.8% from October to November. However, in an election year, this drop tends to be steeper, with sales decreasing by around 15% during the same period. This year, 23% of first-time homebuyers are reportedly waiting until after the election to make a purchase, reflecting the uncertainty that many buyers feel.
What This Means for Los Angeles and Beverly Hills: In luxury markets like Beverly Hills, buyers may feel even more cautious due to the high investment required. With inventory already limited in LA’s prestigious neighborhoods, the slight drop in buyer activity could provide an advantage for serious buyers who are ready to act. For sellers, this temporary slowdown can mean fewer showings in October and early November, but they can expect renewed interest once election-related uncertainties subside.
Do More Homes Sell After an Election?
Answer: Historically, home sales bounce back following an election. In fact, in 82% of election years, home sales have increased in the year after the election. For 2024, experts forecast that home sales will rise from 4.6 million in 2024 to 5.2 million in 2025, suggesting a strong recovery in buyer activity.
How This Impacts Los Angeles and Beverly Hills: In areas like Los Angeles and Beverly Hills, we can expect heightened buyer interest in early 2025. High-end markets, which often experience seasonal slowdowns, could see an extra boost as both local and international buyers become more comfortable investing in luxury properties. This could be a prime time for sellers who want to capitalize on the post-election market upswing, particularly if they are listing unique or high-value homes.
What Happens to Mortgage Rates in an Election Year?
Answer: Mortgage rates typically decrease from July to November during election years, with rates falling 72% of the time. In 2024, we’ve observed a similar trend, with rates fluctuating but reaching as low as 6.08% in September, down from nearly 8% last fall.
Impact on Los Angeles and Beverly Hills Buyers: For luxury buyers in Beverly Hills and high-demand Los Angeles neighborhoods, even slight shifts in mortgage rates can impact monthly payments significantly. The recent dip in rates may provide an incentive for high-net-worth buyers to secure financing at a lower cost. This could make the difference for some buyers, allowing them to comfortably purchase high-value properties in competitive neighborhoods like Holmby Hills, Bel Air, or the Hollywood Hills.
What Happens to Home Prices After an Election?
Answer: Home prices typically rise after an election, increasing in 88% of post-election years. Nationally, home prices are expected to grow by an additional 2.5% in 2025.
What This Means for Beverly Hills and Los Angeles Homeowners: Property owners in luxury markets like Los Angeles and Beverly Hills stand to benefit from these price increases. In these high-demand areas, limited inventory and consistent buyer interest often lead to faster-than-average price appreciation. For those contemplating a sale, holding out until post-election might allow them to capture a higher market price as demand increases and more buyers feel confident moving forward with their purchase plans.
Bottom Line: Presidential Elections and the Housing Market
While election years can create short-term uncertainty, historical trends suggest that this is typically temporary. For sellers in Los Angeles and Beverly Hills, the post-election environment may offer renewed buyer interest and higher sale prices. For buyers, securing a mortgage before rates fluctuate further could be advantageous, especially in a luxury market where borrowing costs make a substantial difference in affordability.
In high-value markets like Beverly Hills and the Westside of Los Angeles, working with an experienced real estate agent is crucial to navigating these nuances. With the right guidance, you can make informed decisions, take advantage of market trends, and secure the best outcomes, regardless of political cycles. If you’re curious about how the upcoming election might impact your specific real estate goals, let's connect and discuss the latest trends in your area.