How Will the Presidential Election Impact Real Estate in Volusia County?
We've all seen the memes: If 2020 were a scented candle, it would be Flaming Porta-Potty. If 2020 were a pizza topping, it would be Dog Drool. The year 2020 gets a one star rating with the review "would not recommend." All jokes aside, 2020 will certainly go down in history as one of the most challenging years of our lives. Between the worldwide pandemic, recession, historic unemployment, and social unrest, our lives will be forever changed. Yet, the real estate market here in Volusia County, and it most parts of the US, seems to be unaffected. In fact, new forecasts project there will be more homes purchased in 2020 than last year. But what about the presidential election? As if this year hasn't been challenging enough, we're preparing for what most will likely be the most contentious election of the century. (Don't worry, this isn't a political post!) But history is the best indicator of the future, so let's take a look at the impact of past presidential election years and the impact they've had on the local real estate market.
Is there a drop-off in home sales during a presidential election year?
BTIG, a research and analysis company, looked at new home sales from 1963 through 2019 in their report titled One House, Two House, Red House, Blue House (We love Dr. Seuss, too!) They noted that in non-presidential years, there is a -9.8% decrease in November compared to October. This is the normal seasonality of the market, with a slowdown in activity that’s usually seen in fall and winter.
However, it also revealed that in presidential election years, the typical drop increases to -15%. The report explains why:
“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.”
Are those sales lost forever?
No. BTIG determined:
“This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”
In a separate study done by Meyers Research & Zonda, Ali Wolf, Chief Economist, agrees that those purchases are just delayed until after the election:
“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year.”
Will it matter who is elected?
To some degree, but not in the overall number of home sales. As mentioned above, consumer confidence plays a significant role in a family’s desire to buy a home. How may consumer confidence impact the housing market post-election? The BTIG report covered that as well:
“A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.”
Again, overall sales should not be impacted in a significant way.
The future is never guaranteed. Who would have guessed a global pandemic was coming for us in 2020? But if mortgage rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market in Volusia County should remain strong up to and past the election.