The Election And What It Means For Home Sales
As summer collapses into fall, the presidential election is looming. In an already surreal year plagued by a pandemic, social disruptions, and a plethora of divisive issues, many people are wondering how the upcoming election will affect home sales. It has been reported that the average home price in Denver has increased to over $600,000 this spring. What will happen now?
As stated in some of our other publications, the average price in the news was misleading. Because the inventory of homes from $0-$500K was so low due to Coronavirus fears and a pre-existing housing shortage, the average price was skewed towards higher-priced listings. Those listings have not suffered as heavily this year. It was not so much that home values skyrocketed through the recession as reported. Rather, the mix of what was available shifted upwards in price. Since the shutdown back in March/April, some of the listings that did not come to market were eventually sold, aligning us closer to normal seasonal trends. Homes from $500K-$900K drove the recovery in Denver. People seized on low-interest rates and the opportunity to trade up to larger homes. It is expected that in the spring of 2021, an even greater number of homes will be brought to market that were not listed this year. This should somewhat lessen the shortage of entry-level homes we have been experiencing.
During non-election years, home sales typically dip about 10% in the six weeks prior to November. Prices are not usually impacted. This is the normal seasonality. In election years, the number of sales drops 15% for the six weeks leading up to the election. This is election-year seasonality. Most likely, the media will not know how to reconcile this sudden drop in home sales with the inflated price averages from this spring. It will probably be reported as some shadowy force that signals impending doom for the real estate market. Do not believe the hype. Seasonal trends still affect our industry, regardless of who wins an election. In fact, based on historical data, which political party gains control does not change these stats from election-year to election-year.
Moving Quickly May Help You Get Ahead
Depending on your circumstances, if you act fast you may see a bit of luck in the next month or so. The election will most likely slow some people down on their home searches while they wait to see the outcome, and average home sales may drop by as much as 15% nationwide. That, coupled with historically low-interest rates, could help you get a sweet deal that has eluded many in the more competitive summer months. In the six weeks after the election, home sales should swing upwards again based on historical trends. Interest rates will increase by at least half a percent — as they do after every presidential election. If it is in the cards for you financially to act fast, know that these low rates will not last forever. If not, Spring should bring more inventory for you to choose from. It is difficult, if not foolish, to try to time the market. So remember to act in your best interest and be patient once you do start searching for a home.
ACT STRATEGICALLY TO MAKE THE MOST OF THIS SELLER’S MARKET
It has been a seller’s market for years, and there is nothing to signal that will change any time soon in Denver. Depending on your situation, you may want to consider jumping in now before the winter sets in and the market cools off. Interest rates always go up by at least half a percentage point after any presidential election, so if you act fast you may lock in a better rate on your next home. Perhaps you want to hold off on selling until after the presidential election when home sales are expected to increase again after the pre-election dip. Some sellers may even wait until spring when the market gets red hot and more buyers are expected to start shopping. No matter which way you spin it, sellers are still in the driver’s seat in terms of negotiations. Inventory is low and demand is high in Denver, which leads to more positive outcomes for sellers.