The Election And What It Means For Home Sales
As summer transitions into fall, the presidential election looms. In an already surreal year plagued by a pandemic, social disruptions, and a plethora of divisive issues, many people are wondering how the upcoming election will affect home sales. It has been reported that the average home price in Denver has increased to over $600,000. What will happen with the election on the horizon?
As stated in our last publication, this $600,000+ average price in the news was misleading. The inventory of homes from $0-$500K was already very low due to a pre-existing housing shortage only to be exacerbated by Coronavirus fears; thus causing the average home price to be skewed towards higher priced listings as those were more available. Simply put, it was not so much that home values skyrocketed through the recession as reported. Rather, the mix of what was available shifted upwards in price. Since the shutdown back in March and April, some of the listings that did not come to market those months were eventually sold more recently, aligning us closer to normal seasonal trends. Homes from $500K-$900K drove the recovery in Denver. People seized on low interest rates and the opportunity to trade up to larger homes. It is expected that in spring of 2021, an even greater number of homes will be brought to market that were not listed this year. This should somewhat lessen the shortage of entry-level homes we have been experiencing.
During non-election years, home salestypically dip about 10% in the six weeks prior to November. Pricesare not usually impacted. This is the normal seasonality. In election years, the number of sales drops 15% for the six weeks leading up to the election. This is election-year seasonality. Most likely, the media will not know how to reconcile this sudden drop in home sales with the inflated price averages from this spring. It will probably be reported as impending doom for the real estate market. Don’t believe the hype. Seasonal trends still affect our industry, regardless of who wins an election. In fact, based on historical data, which political party gains control does not change these stats from election-year to election-year.
Moving Quickly May Help You Get Ahead
Dependent upon your circumstances, you may be well poised to take advantage of a dip in homes sales in the next month or so. The election will most likely slow some people down on their home searches while they await the outcome, and average home sales may drop by as much as 15% nationwide. That, coupled with historically low interest rates, could help you get a sweet deal that has eluded many in the more recent competitive summer months. In the six weeks after the election, home sales should swing upwards again based on historical trends. Interest rates should increase by at least half a percent —as they do after every presidential election. If it’s in the cards for you financially to act fast, know that these low rates will not last forever. If you are unable to move quickly, spring should at least bring more inventory for you to choose from. It is difficult, if not foolish, to try to time the market. So always remember to act in yourbest interest and do what is right for your season in life.
ACT STRATEGICALLY TO MAKE THE MOST OF THIS SELLER’S MARKET
It has been a seller’s market for years, and there is nothing to signal that will change any time soon in Denver. Depending on your situation, you may want to consider jumping in now before the winter sets in and the market cools off. Interest rates always go up by at least half a percentage point after any presidential election, so if you act fast you may lock in a better rate on your next home and/or catch the influx of buyers taking advantage of current rates. Perhaps you want to hold off on selling until after the presidential election when home sales are expected to increase again after the pre-election dip. Some sellers may even wait until spring when the market typically gets red hot and more buyers are expected to start shopping. No matter which way you spin it, sellers are still in the driver’s seat in our local real estate market. As stated above, it’s important to do what’s right for you and your timeline. Give me a call so we can figure out the best plan tailored to achieve your real estate goals!