At Home with Team Gabriel

Whether we’re ready for it or not, the 2020 presidential election is right around the corner.

As if this year hasn’t brought enough uncertainty, an election could be causing People to question their buying and selling plans…again.

Rocky political environments can create instability in the stock market-causing consumer confidence to drop. But the real estate market isn’t rocky…it’s rock solid. And delaying plans could mean that YOU could be missing out on once-in-a-lifetime affordability.

To get to the heart of this, it’s important to understand how the history of past presidential elections combined with today’s market factors might play out in real estate this time around.

Here’s what we know.

The Real Estate Market Might Slow Down-But Not for Long

Historically speaking, home sales typically slow down in the fall following the spring and summer rush. BTIG, a research and analysis company, looked at new home sales from 1963-2019 and noted an average decline of -9.8% in November compared to October.

In that same report, they noticed that this decline becomes slightly more exaggerated in presidential election years, dropping as much as -15% from October to November.

So, why the decline? BTIG attributes it mostly to do with buyers and sellers just becoming more cautious during that time.

They go on to explain,

“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.”

Considering the current state of real estate across the country, we can anticipate that while a slow down may occur, its effects will only be temporary. Home sales have remained strong throughout the last couple of winters, and the competitive nature of today’s current market suggests this year should be no different.

The First Year After an Election is the Best for Real Estate

While presidential election years may cause consumer weariness, another study looked at how the housing market performs after too.

Meyers Research and Zonda, a leading real estate research firm, found additional data that the year following an election can be the best of the presidential term for home sales.

According to their findings:

“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 as long as the economy stays on track.”

While this is definitely not your typical election year (understatement of the century), experts believe that once the election is over, we could see the real estate market perform even better in the months following.

It’s All About Consumer Confidence

The economy is tightly connected to politics, and real estate is tightly connected to the economy.

While many other parts of our economy have made a slow and steady recovery, the housing market’s rebound was miraculous, stunning even housing market experts.

“The housing recovery has been nothing short of remarkable. The expectation was that housing would be crushed. It was—for about two months—and then it came roaring back,” said Ali Wolf, Chief Economist for Meyers Research.

A big piece of this puzzle is consumer confidence. Low-mortgage rates have continued to drive once-in-a-lifetime affordability for homeowners, and buyers have been more concerned about missing out on the deal of the century than anything else.

Therefore, confidence in the real estate industry has remained relatively high, driving a record number of buyers into the market and put us in a position to potentially outperform last year’s sales.

In Conclusion

While our country’s overall economic state may be slowly but surely returning, the presidential election may cause consumers to watch and wait in the weeks to come.

However, as we saw with the pandemic, the reward of locking in record-low mortgage rates also may continue to outweigh any consumer caution and drive buyers and sellers to act.

Plus, low inventory and high buyer demand puts sellers in a very powerful position.

History suggests that a slowdown in the housing market is inevitable, but this is definitely not your typical presidential election and every real estate professional should keep a close eye on what’s happening.

The best way to do this is to stay on top of the latest market news and insights, so you can be a voice of reason to your clients during these turbulent times. 

If you are considering a Move, Call My Team Today! (860) 618-6233!

How long have you lived in your current home? If it’s been a while, you may be thinking about moving. According to the latest Profile of Home Buyers and Sellers by the National Association of Realtors (NAR), in 2019, homeowners were living in their homes for an average of 10 years. That’s a long time to time to be in one place, considering the average length of time homeowners used to stay put hovered closer to 6 years.

With today’s changing homebuyer needs, especially given how the current health crisis has altered our daily lifestyles, many homeowners are reconsidering where they’re at and thinking about moving to a home with more space for their families. Here’s why it might be a great time to make that happen.

The real estate market has changed in many ways over the past 10 years, and current homeowners are earning much more equity today than they used to have. According to CoreLogic, in the first quarter of 2020 alone, the average homeowner gained approximately $9,600 in equity. If you’re considering selling your house right now, you may have accumulated more equity to put toward a move than you realize.

Dialing back 10 years, many homeowners also locked in a fairly low mortgage rate. In 2010, the average rate was only 4.09%. This motivated homeowners to stay in their houses longer than usual to keep their rate low, rather than moving. Just last Thursday, however, average mortgage rates hit a new historic low at 2.86%. Sam Khater, Chief Economist at Freddie Mac explains:

“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity, which is up twenty-five percent from a year ago and has been growing at double digit rates for four consecutive months.”

Ten years ago, we couldn’t have imagined a mortgage rate under 3%. Looking at the math today, making a move into a new home and locking in a significantly lower rate than you have now could save you greatly on a monthly basis, and over the life of your loan (See chart below):

As the example shows, you can save a substantial amount every month if you qualify for today’s low mortgage rate, and the savings can really add up over the life of a 30-year fixed-rate loan.

In Conclusion 

As a homeowner, you have a huge opportunity to move up right now. Whether you want to save more each month or get more home for your money based on your family’s changing needs, it’s a great time to connect to discuss the market in our area. Buyers are actively looking for more homes to buy, and you can win big by making a move if the time is right for you. It is a HOT Market, NOW is the Time to Buy or Sell! For a FREE No-Obligation Market Value of Your Home, CALL me Today at (860) 618-6233!!