The 2024 election will indeed have an impact on mortgage rates, though likely in indirect and gradual ways. This is because mortgage rates are typically driven by broader economic indicators rather than political shifts alone. However, as Chad Breeden, founder of Sentry Real Estate, tells Kiplinger, a change in administration often introduces new economic policies that can shift market sentiment and, consequently, influence interest rates.
“What really matters is the market’s reaction to post-election economic policies,” notes Dutch Mendenhall, Founder of RADD Companies. Adjustments in fiscal policy, government spending, and economic growth can all factor into the Federal Reserve’s decision-making, which indirectly influences mortgage rates. When the Fed alters its rates, variable and adjustable mortgage rates often follow, though fixed-rate mortgages may respond more slowly.
Recent activity by the Federal Reserve highlights this effect: in September, the Fed cut its rate for the first time in several years. Following this decision, mortgage rates saw a slight decrease, but rebounded during the week of October 24 with the average 30-year mortgage rate reaching 6.54 percent, according to Freddie Mac. While fixed rates don’t react immediately to Fed cuts, buyers with variable-rate mortgages often benefit from these adjustments more directly.
Real Estate Trends in Election Years
After a presidential election, the real estate market has often experienced a boost, sometimes referred to as a “post-election bounce,” says the Motley Fool. Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows that home sales increased in nine out of the last 11 election years, with exceptions only in 1981 and 1989. While today’s market is different from past cycles—largely due to the pandemic-driven changes—similar patterns of post-election recovery could still emerge.
Home Prices Following Elections
Historical trends indicate that presidential election years generally don’t destabilize home prices. Data shows that prices tend to remain steady or rise, especially when inventory remains low. Notably, in all post-election years since 1978, home prices have increased, except for 2008 during the housing crash. So, while sellers might feel some uncertainty, they can likely expect property values to hold steady in 2024.
A Minor Slowdown in Buyer Activity?
It’s common for homebuyers to become cautious during election periods, delaying major financial decisions. This temporary pause can slow down home sales slightly, but sellers shouldn’t be overly concerned. In many parts of the country, low inventory and high demand continue to drive quick sales, and any slowdown during election season is typically short-lived.
In the end, while elections certainly have an impact on the economy and real estate, they tend to be gradual rather than immediate. For prospective buyers, this could mean slight adjustments in mortgage rates, with larger shifts more likely to follow in the months after the election based on new economic policies.
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