How the 2024 Election Could Impact the Housing Market

Historically, election years bring volatility to equities and housing markets.

Buyer/seller behavior, home & rent prices, mortgage rates, taxes, and inflation are impacted by the upcoming change. With a different or new administration on the horizon, taxpayers anticipate the implementation of new policies and laws.

Will the 2024 U.S. election be any different?

Buyer/Seller Behavior

Newsweek recently covered, Jason Obradovich’s, Chief Investment Officer at mortgage lender New American Funding, thoughts on the election year’s impact on the housing market.

Jason stated, “There is certainly a human element to housing prices and mortgage rates. As a result, election years can bring more volatility to prices and rates than in non-election years. However, those moments of volatility are fleeting,”

Danielle Hale, Chief Economist at Realtor.com, spoke to uncertainty in past election years, stating, “Uncertainty is a regular feature of economic decision-making, and the election is just one more type of uncertainty to consider.” 

Home Prices and Rent Prices

Zach Lemaster, founder & CEO of Rent to Retirement, analyzed the data from past election years to substantiate predictions for 2024 with Dave Meyer of BiggerPockets.

He stated, “Every single year over the past 28 years, home prices have increased during the election year and the year following the election year, with the exception of 2008. In 2004, 2012, and 2020, we saw appreciation rates in the mid to high teens.”

“Over the past eight elections, every single year, rents have increased from the year prior and the year following that.”

Danielle Hale noted appreciation during election years and believes it’s related to the change in the economy, “With the notable exception of 2008, home sales and prices have gone up in every prior election year, but the macroeconomy more than the election is the key driver.” 

Interest Rate Trends During Election Years

While the Fed determines interest rates, not the President, the trends during election years provide valuable insight into what’s to come in the next few years.

Lemaster reviewed past trends, “Looking at interest rates specifically, it was very interesting to see that interest rates have decreased every single year except for two years. And, those two years were 1996 and 2016, and there was less than a half-point increase during the election year. But rates have gone down in all of those years.

Now, on the contrary to that, the year after the election year, all those same years, the rates increased, actually, except for 96 and 2016. So that means that rates actually dropped during the year of the election and then increased the year after that.”

The Impact of the Labor Market

High interest rates have severely affected real estate investors, and the possibility of the Federal Reserve cutting rates this fall is a pressing topic.

Federal Reserve Chair, Jerome Powell, stated on July 31, “If we were to see inflation moving down … more or less in line with expectations, growth remains reasonably strong, and the labor market remains consistent with current conditions, then I think a rate cut could be on the table at the September meeting,”

Logan Mohtashami, Lead Analyst at HousingWire, believes strongly that the labor market is the dominant factor, stating on a recent HousingWire Daily episode, “The rate cut doesn’t matter as much as the labor data. The bond market is somewhat ahead but not in job loss recession mode yet. If the labor data starts to break, the 10-year yield could get down to 3.80, and mortgage rates could get to the mid to low sixes if spreads improve. The labor market is crucial. If jobless claims start to rise significantly, that will drive rates lower regardless of the Fed’s actions.”

The Fed or The President for Larger Impact?

Obradovich commented on the power of the Fed, “Between now and the election, the moves or lack of moves from the Federal Reserve will have much more impact on the market than the machinations of a political race. If the Fed is comfortable enough to lower interest rates in the next few months, that will help bring interest rates down, which will help improve affordability for homebuyers.”

“The challenges that impact housing today are unfortunately more structural than policy-driven, which means it will be very difficult for any administration to do anything that truly affects the market.”, Obradovich said.

Inflation and Mortgage Rates

Inflation has been a heavily discussed topic and its impact has been astronomical including on house prices. Trump has promised to end the “inflation nightmare” and VP Harris is planning to target price gouging as a strategy to ease inflation. 

Mark Calabria, the former Federal Housing Finance Agency (FHFA) director under Trump spoke on inflation’s impact on the housing market to HousingWire, “If you deal with the underlying inflationary issues, that will help with housing affordability.” However, he remarked, “We’re not going back to 3% mortgage rates.”

Obradovich is less than hopeful regarding the impact an administration could have on inflation, saying, “Currently, the housing market is challenged by low inventory and the rate of housing production that is not keeping pace with demand. Beyond that, interest rates are artificially high due to inflation pressures and there are no policies that a party could realistically implement that will help unlock those inflationary pressures. In my opinion, the housing market will not return to a healthy version of itself until inflationary pressures are nearly gone and the FOMC [Federal Open Market Committee] can start lowering interest rates. That will allow homeowners to buy and sell houses more regularly while hopefully supply can begin to catch up.”

Trump’s 2017 Tax Cuts Expiring

While inflation is one topic that taxpayers have their eyes on, the potential extension of the Tax Cuts and Jobs Act of 2017 is as well.

Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, emphasized the gravity of the situation, “Pretty much the entire individual income tax code is on the table at the end of 2025.”

With these tax cuts expiring in 2025, taxpayers may expect an increase in federal income tax rates, a fall in the standard deduction, a decrease in the child tax credit, and an adjustment to federal gift and estate tax exemptions. 

If Trump is reelected and the TCJA is extended, the decision will add trillions to the national deficit. While an extension may boost the economy, the impact on our nation’s debt should be carefully weighed.

Conclusion

While an election year brings many changes, according to Obradovich the housing market may not be directly impacted by the candidate chosen, but by the market’s reaction. 

“More than anything, what typically affects the housing market in election years is the market’s reaction to the election results. If the market believes the party that wins the election will stimulate growth, then we could see positive effects on the overall economic outlook,” Obradovich said, “The bottom line is that prospective homebuyers need to monitor the market and be aware of what’s happening, but be ready to capitalize on an opportunity if one presents itself.”

In this article, we’ve compiled expert insights to analyze how an election year impacts the housing market.

Follow along with our live presidential tax plan tracker to analyze how it will impact your taxes.