Driving factors that determine the real estate market are bountiful. Supply and demand, employment rates, and sales velocity – just to name a few.
But what about the political environment?
An important question to ask yourself indeed. And with the approaching presidential election, there are many considerations.
So are you thinking of investing in real estate 2020? Before you do, here are the 3 things you must know.
1. Sales activity will drop
A 50-year analysis over 13 presidential elections indicated, according to Meyers Research, that median change in sales activity dropped 15% during election years and 8% the year after. This change typically occurs during October and November, weeks before and after the presidential election takes place. These months could be a challenging time to sell your house. It’s also important to consider that the Trade War, as well as fear of an impending recession, could also aggravate this fluctuation.
2. Appreciation rates could decline
From the standpoint of the buyer, this is a good thing! But don’t misunderstand. It just means that the rate of property price appreciation will reduce. This has been the historical case as Americans prepare to cast their votes and prepare for what is in store for the following four years.
3. Rent might become cheaper
According to Harvard’s Joint Center for Housing Studies, the US was not producing enough housing units to keep pace with consumer demand in 2018 and 2019, thereby hiking the prices of rent. But fear not! Some presidential candidates for the 2020 race have drawn plans to distribute billions to states over the next several years, with the objective of building less expensive housing units.
So why do elections affect real estate?
The bottom line is that during election years, people are burdened by tension and anxiety. These times are uncertain and people often hesitate to make large purchases. Essentially, investing in real estate is not people’s top priority during this time.
What you can do?
Though there is a lot of conjecture as to how the real estate market will look like in 2020, no one knows for sure. So if your 2020 New Year’s resolution is to purchase investment properties, it is important to work with an investment company with an intelligent recommendation engine technology for you to mitigate risk and achieve your financial goals.