The best blogs come from plywood companies.
I always say that.
Or at least today I do b/c I found this excellent blog, titled “Presidents and Plywood – How Elections Affect the Housing Market.”
I have blogged numerous times about how the election might impact interest rates, but I have not focused on how it might affect housing prices – until now.
The above linked blog’s author focuses on several criteria, summarized below:
- Historical Trends. Home prices tend to rise about 1.5% slower during election years than they do in the year that precedes an election year.
- Uncertainty. This is almost humorous b/c she mentions that the uncertainty surrounding an election can make it more difficult to sell a home. But given that this may be the strongest “seller’s market” ever, that observation does not seem particularly accurate this year.
- Taxes Rates, Deductions and Credits. The elimination of all the special tax advantages associated with real estate (deductibility of interest, capital gains exemption, etc.) would negatively impact appreciation. Neither candidate has expressed an interest in eliminating these credits though, so I don’t see this having much of an impact.
- Consumer Confidence. Needless to say, strong consumer confidence usually translates to stronger housing demand – bolstering appreciation. But, each candidate’s side is 100% convinced that their candidate will be better for the economy overall which will result in more consumer confidence. I will stay out of that debate though.
- Washington DC Exception. This factor does not affect most of the readers of this blog but I am sharing b/c it is interesting. Washington DC bucks all trends when new administrations come to town, as they bring hundreds if not thousands of new residents and potential homebuyers to the area – particularly in the greater DC area the year after the election.
The above factors are nice considerations, but the major factors driving housing prices right now are: (1) low inventory; (2) millennial buying demand; and (3) very low interest rates.
And those factors are mostly outside of a President’s influence.
So, while elections and Presidents can ultimately influence housing prices, they probably do not influence prices enough to make them a major concern (in the short term at least).
The only exception would be if a particular President’s policies end up being a bigger drag on the economy than anyone anticipates, as a bad recession can easily offset even the most positive of influences.
No matter what happens though, I think we should all go out and buy some plywood, as I suspect that was the primary point of the above referenced blog. 😊
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