How will the Election impact Real Estate now and in 2025?
How has the election impacted rates and home sales this year and what happens next year?
Election day is just days away on the calendar. My vote has been cast already, as I'll be traveling on Tuesday and I wanted to avoid any lines or delays that could derail me. In reading the Lancaster newspaper on Wed, I'm not the only person that voted early. The article noted one day they counted up to 2000 people on line to vote early... WOW!
Good to hear people are voting. I know the pandemic in 2020 had a big impact on how people were able to vote, I'm assuming the flexibility of being able to vote in different manners is just carrying over?
How is this election impacting you and me in the Real Estate community? Before I go into this, here are a couple of items you should know. Most years, despite which party wins the election, home sales tend to rise after an election year. (See graphics below). While whoever wins will take credit for rising home sales, we know much of it was going to happen anyway. The fight on inflation started 1.5 years ago, neither party can claim they conquered inflation in 2025.
1. Not totally unusual, however, some buyers are waiting on the sideline to see who wins the election. Their comfort level with what will happen to the economy, depending on who wins is keeping them on the fence. As we can see below, despite what happens on Tuesday, many of these buyers will get off the fence.
2. The run-up to the election has had an impact on the stock/bond markets, which in turn, has an impact on mortgage rates. Mortgage rates, highly impacted by the bond market, have been trending up, almost since the Fed rate cut in September. Bonds and therefore mortgage rates do not like uncertainty and there is a lot of uncertainty in the markets today. We do expect lower mortgage rates as we head towards the end of 2024 and into 2025... give it time.
3. What will happen with inflation if A or B wins? The Fed has been fighting inflation since 2022 with a series of notably severe Fed Funds increases and just this year are seeing signs of winning the battle and inflation falling to their expected levels. Put this on the side of uncertainty which adds to the volatility of the markets and this fear and uncertainty pushes bond prices down, mortgage rates up. The fight against inflation is difficult and can be slow, however, it started almost 2 years ago now.
4. While the Federal Reserve is not controlled by the President and does it's best to stay neutral. It is an independent and non-partisan organization. However, any fiscal policy that is enacted by Congress and signed into law, must be taken into the Fed's analysis of the economy and how they view inflation and employment. Those are the two primary concerns of their actions... inflation and employment/unemployment. If A or B wins, will the Fed be able to maintain their stance of further Fed rate cuts this year and into 2025?
Most importantly, get out there and vote on Tuesday, if you haven't already. Listen in and I'll give you my opinion of politics and the election.
To Your Success,
Ken and Your Home Buying Team at FAIRWAY
