HOW PRESIDENTIAL ELECTIONS HAVE INFLUENCED THE REAL ESTATE MARKET Over the past 50 years
For over five decades, the U.S. presidential elections have been a key driver in shaping economic policy, and real estate is no exception. While not always directly tied to the daily operations of buying and selling homes, the influence of presidential policies on interest rates, tax laws, and market confidence often reverberates throughout the real estate industry. Understanding how these elections have impacted the market is essential for advising clients, whether they are homebuyers, sellers, or investors
The 1970s was a challenging decade for the real estate market, primarily due to economic instability marked by high inflation, rising interest rates, and stagnant growth The presidency of Jimmy Carter saw inflation reach double digits, which significantly raised mortgage rates. By 1980, mortgage rates had climbed to nearly 18%, severely dampening housing affordability and pushing many prospective buyers out of the market.
The high cost of borrowing during this period made real estate transactions difficult. Potential homebuyers were discouraged by sky-high interest rates, and sellers struggled with decreasing property values Real estate firms often had to adapt by shifting focus to markets less sensitive to interest rates, such as commercial properties or cash buyers
The election of Ronald Reagan in 1980 marked a significant shift toward economic deregulation, which had profound effects on the real estate industry Reagan’s administration focused on reducing inflation through tight monetary policies, led by Federal Reserve Chairman Paul Volcker. As inflation fell, interest rates gradually came down from their record highs, making housing more affordable again.
During the 1980s, the real estate market experienced a boom, particularly in commercial real estate and high-end residential properties Real estate brokerages benefited from increased activity as more buyers entered the market, drawn by decreasing mortgage rates and the prospect of homeownership becoming more accessible Additionally, the Tax Reform Act of 1986 had a mixed impact on real estate, eliminating some tax shelters for investors but ultimately helping to stabilize the broader housing market
The 1990s were marked by economic growth, low inflation, and decreasing interest rates under President Bill Clinton’s administration. The 1994 election, which brought in a Republican-controlled Congress, also led to bipartisan efforts to balance the federal budget, resulting in sustained economic stability For real estate, this era saw more stable mortgage rates and increased homeownership
The real estate market saw growing demand for housing, spurred by both economic growth and a strong labor market. New construction flourished, particularly in suburban areas, and the market for real estate services expanded. The tech boom also contributed to increased demand for office space, driving growth in commercial real estate markets.
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The early 2000s, under the presidency of George W. Bush, saw significant changes in the real estate market. Deregulation in the financial industry, combined with low interest rates and easy access to credit, fueled a housing bubble. From 2000 to 2007, housing prices soared, and real estate activity surged – this was a lucrative period as demand for homes and mortgages hit record highs.
However, this growth proved unsustainable By 2008, the housing bubble burst, leading to the worst financial crisis since the Great Depression The subprime mortgage meltdown led to a collapse in home prices, widespread foreclosures, and a drastic reduction in home sales
In response, the federal government, under both the Bush and Obama administrations, implemented rescue measures, including bailouts and housing market stimulus programs such as the Home Affordable Modification Program (HAMP). The late 2000s and early 2010s were a time of recovery, marked by distressed property sales and a focus on helping clients navigate the aftermath of the crash.
The 2010s began with a slow recovery from the Great Recession. President Barack Obama’s administration continued efforts to stabilize the housing market, including the Dodd-Frank Act, which introduced more stringent regulations on mortgage lending Over time, the market began to recover, with home prices and sales gradually increasing throughout the decade
This recovery period brought both challenges and opportunities – foreclosures and short sales remained a significant part of the market in the early 2010s, but by mid-decade, the housing market had largely stabilized. Lower interest rates, combined with a recovering economy, fueled demand for both residential and commercial properties. The later years of the decade, under President Donald Trump’s administration, saw significant tax reforms, including the Tax Cuts and Jobs Act of 2017. This law had a mixed impact on real estate. While it lowered corporate tax rates, boosting commercial real estate, it also limited deductions for state and local taxes (SALT), which affected housing markets in high-tax states like New York and California
The election of 2020, which brought President Joe Biden to office, came at a time of unprecedented challenges for the real estate market due to the COVID-19 pandemic The housing market initially saw a dramatic slowdown in the early months of the pandemic, but record-low interest rates and a shift to remote work eventually led to a housing boom in 2020 and 2021. Many Americans sought larger homes and moved to suburban or rural areas, driving up home prices.
The Biden administration’s policies on housing have included efforts to address affordability, stimulate new construction, and provide relief for renters and homeowners affected by the pandemic.
However, rising inflation and the Federal Reserve’s subsequent interest rate hikes in 2022 and 2023 have led to higher mortgage rates, slowing down the housing market once again
Over the past 50 years, the real estate market has experienced cycles of growth, crisis, recovery, and stabilization, often influenced by presidential elections and the resulting policies. Presidential elections bring both opportunities and challenges as political shifts influence everything from interest rates to tax policy and housing regulations
While no single election can be pinpointed as a decisive factor in long-term market trends, each presidency has left its mark on the real estate landscape From high interest rates in the 1970s to the housing boom and bust of the 2000s and the pandemic-induced changes of the 2020s, the real estate market has had to adapt to an ever-changing environment.
QUARTERLY NUMBERS
Percent change from Quarter 3 2023
ASK AND YOU SHALL RECEIVE:
This is the market homebuyers have been waiting for!
Have you been idling on the sidelines of the housing market? Perhaps you ’ re waiting for interest rates to fall or housing inventory to rise Here are four reasons why homebuyers should get back in the game
1. Lower interest rates.
As of the end of September, interest rates have fallen to around 6 12 percent for an average 30-year fixed rate mortgage, down from about 7 5 in October 2023 Consequently, the cost of borrowing – and home payments – is down.
2. More inventory.
Limited inventory has challenged buyers since well before the Covid-19 pandemic. And less choice makes for stiffer competition (more on that below). Fortunately, the inventory of single-family homes has increased 23% over 2023, and 6% over 2022
3. Less competition.
In a competitive situation, people with cash hold the advantage when it comes to buying a home And in the postCovid real estate surge, many conventional borrowers lost out to all-cash buyers Thanks to more inventory, competition is easing, and fewer listings are attracting multiple offers.
4. Sellers are negotiating.
For the reasons stated above, sellers are more willing to offer concessions to buyers on home improvements, repairs, and even financing incentives (such as interest rate buydowns). It’s less likely that buyers need to accept properties as is – while waiving important steps such as inspections and appraisals – just to be competitive
As we finish out 2024, it may be tempting to wait for conditions to get even better But that’s a risk Many of these buyer-positive market conditions could slowly erode, causing a window of opportunity to close The psychology of real estate has always been one of not trying to predict the future but focusing on the opportunities of today Call us to discuss if it might make sense for you to buy or sell real estate this fall.
WHY WINTERIZE (and how to make it a BREEZE)
As the days get shorter and the nights a little chillier, it’s time to start thinking about one of life’s inevitabilities —winter. Whether you love the cozy season or count the days until spring, there's one thing we can all agree on: winterizing your home is essential. If you’re a first-timer or even a seasoned pro, winterizing doesn’t have to be a daunting task! Here’s why it’s important (and how you can do it with a smile).
WHY BOTHER WINTERIZING?
Imagine this: it's a cold January night, and you're wrapped in a blanket when suddenly...a draft creeps in. Not only is it uncomfortable, but without proper winterization, your energy bills could skyrocket faster than your favorite sled downhill.
Winterizing protects your home from the harsh elements, keeps you cozy, and helps avoid costly repairs down the line. A little prep now can save you headaches later — think frozen pipes, damaged roofs, or snow creeping where it shouldn't.
TIPS AND TRICKS TO WINTERIZE LIKE A PRO
1.
Seal Drafts – Use weatherstripping or caulking to close up gaps around windows and doors.
Reverse Ceiling Fans – Flip the switch so they rotate clockwise to push warm air down. 2. Insulate Pipes – Foam covers prevent pipes from freezing. 3.
Clean Gutters – Clear debris to avoid ice dams and potential roof leaks. 4. Check Your Furnace – Replace filters and schedule maintenance for reliable heating. 5. Prep Snow Equipment – Get your snowblower ready and stock up on salt for icy sidewalks.
WINTERIZING MADE
FUN (YES, REALLY!)
Here’s a little secret—winterizing doesn’t have to be a solo chore. Grab some hot chocolate, invite friends or family over, and make it an event! Play some music, divvy up the tasks, and make a day of prepping for the season. You’ll feel accomplished, and your home will thank you for it when the snow starts falling.
So, throw on your favorite sweater, grab a wrench (or two), and get ready for a snug, stress-free winter. With these tips and a little effort, you’ll be sipping cocoa by the fire, knowing your home is as ready as you are for whatever winter brings!
UPCOMING EVENTS
