Presidential elections shake up every industry in some degree, regardless of the outcome. One industry that is particularly affected, however, is the housing market. Understanding what the 2020 presidential election means for the U.S. housing market in general should give you some foresight as to whether you can expect a buyer’s market or seller’s market.
How the presidential election affects the U.S. housing market
Although the Trump campaign is challenging the election results through the court system, all signs point to a pending Biden administration next year. For the sake of this article, our projections are based on a the transition into a Joe Biden presidency. The following reviews the current state of the U.S. housing market under the Trump administration, the unique situation of this year’s election (given the pandemic) and what you can expect from the housing market once Joe Biden and his running mate Kamala Harris enter office.
The current state of the U.S. housing market
The current interest rate for home buyers is around three percent, which is lower than it normally is. The lower interest rate is intended to encourage prospective buyers to purchase during a time when the economy is slower than normal due to the COVID-19 pandemic (see below). However, prices have not dropped much in 2020. This is particularly true in the latter part of this year, which is possibly due to low inventory in the housing market and pent-up demand among homebuyers.
The uniqueness of the 2020 election due to COVID-19
The housing market looks different currently due to the COVID-19 pandemic. As discussed, there are fewer homes available and the interest rates across the board are lower. This means Biden will take office with unusual circumstances in every industry, and the U.S. housing market is certainly no exception.
What you can expect from the housing market in 2021
So how does this relate to the 2020 presidential election? Well, the answer is it could be quite significant, especially for first time home buyers. President-elect Joe Biden plans to make becoming a homeowner easier, offering up to a 15 percent tax credit for first time buyers. By making housing more affordable for first time buyers, you could see a drastic increase in the number of homes being purchased in 2021. This could drive prices up, however, if there are not enough homes to meet the demand, creating competition among homebuyers.
What you can expect from the housing market long-term
Forecasting the housing market in 2020 under a Biden administration is not as difficult as predicting the long-term impacts of a Biden administration on the U.S. housing market. Long-term, the goal would be to keep a buyer’s market through affordable housing initiatives, although this may be a difficult balance if the demand for homes is substantially greater than the demand. You could see more competition for homes, driving the prices up slightly, but at the same time more benefits to purchase (tax credits, etc.).
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EXIT Realty Bob Lamb & Associates
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