Here is How the Real Estate Sector Would Behave in the Wake of US Election

By: Abdullah Haroon

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Economic sectors are always dependent on ground politics. Whatever happens in the political helm directly impacts the economic activities and the real sector has no immunity to it.

2020 is the year of the presidential election, the biggest political battle in the world let alone in the United States. President brings on personal vision in the management which dictates the future of the economic activities.

If we talk about the 2020 election, incumbent President Donald Trump is competing with Joe Biden, a candidate of the Republic party. As for the current picture, Joe Biden is leading with substantial votes and all set to sit on the throne.

Apart from conventional debates about financial and foreign affairs, these elections are marked with policies related to COVID-19. America is on the cusp of the second wave of COVID-19 and people are desperate to get rid of it. In the wake of the second wave, the US stock market is in fluctuation. Though the Federal Reserve has reduced the interest rate to zero that too did not prove enough for the market to recover.

The uncertainly about the COVID-19 left its mark on the real estate sector and as if it was not enough, presidential elections worsened the situation.

Read Also: NYC Real Estate Industry in the time of Coronavirus

Real Estate Sector and the 2020 Election:

To be honest, it is hard to evaluate the role of election in making sense of the market as there has been so much happening in 2020. Apart from the Corona virus, the stock market fluctuation continues to sore the market.

united states of america president voting 2020

The reason why the presidential election matters so much are because it creates a vacuum for a certain period. Presidents derive policies based on personal and party ideology. Though major questions are set straight in the pre-election debates and the media provide enough analysis to learn about future trends. But still, ground realities have a final say in the development of policies.

Besides, people worry about who would sit on the seat and what would he bring to the table? Followed by queries as to what would be the tax and interest policies of the government and how would that affect the stock market? In addition to them, people fear change and become nervous during such situations which hamper their faculty of decision making.

Presidents bring on personal agenda which disturbs the interest rates.  Lowering interest rates means more people can afford the mortgage which would bring more buyers of property to the market.

The incumbent president himself is one of the moguls of real estate in the United States. The housing sector grew because he had a positive vision for the sector and promised to increase economic activities.

On the other hand, Joe Biden has other plans and purposed to bring reforms in the current tax rates. This means a clear deviation from the former policies and it would take time for people to make sense of new reforms and cash the market accordingly.

Due to a host of reasons, consumers resolve to wait and see how the market will behave and then take a final decision.

Stability Restores if the Incumbent President Wins:

As we learn that people shy away from change, winning incumbent presidents feels like a silver bullet. It means that familiar policies would gain more ground and previous trends are likely to stay. So people come out of their bubble sooner and make rational and learned decisions which bring activity in the housing sector and stability in the stock exchange.

incognito voter holding vote button

On the other hand, for a new president, it takes people some time to learn and anticipate the future trends which means the market would improve slowly.

Trends in the Housing Sector in an Election Year:

If we read the previous data, it reflects that there remains a drop in home sales during the fall. And if that has to be the election year, the decline becomes sharper. Selling in this season might not be as comfortable and is less likely to attract more buyers. On the other hand, buying may work to your benefit as there are a few buyers in the market which means less competition.

Read Also: The Future of NYC Real Estate Market After COVID-19 looks Bright

In the same vein, usually properties gain capital every passing year and tend to be expensive with the time. However, close to the election, the process slows down and prices do not go as high as under normal conditions. This means that this is not an ideal time to sell a property purchased from an investment perspective.

Final Thoughts:

To be honest, it is not the right time for selling a property bought from an investment perspective. There is so much uncertainty in the air that one may hardly decode the trend.

As the 2020 elections are underway, major players have resorted to waiting for the final results as to who would claim victory. They are keen to learn about expected changes in the tax system or interest rates to make the most out of them. This is why home sales are likely to drop in the current scenario.

Have a blessed time ahead.