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Election Years Are Bad for Home Prices

David Cross

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By League of Women Voters of California

At Movoto, we’re inquisitive people. So, when one of our Realtors asked if presidential election years were good for housing, we wanted to know.

Using historical data from the California Realtors Association, we crunched numbers and noticed that home prices rise less quickly in years with presidential elections. It wasn’t a drastic change, but a change nonetheless.

What does this mean? When you own a house you expect the price of your home to increase each year. After all, it’s not just the place you live, but it’s also an investment. But in election years, the price you increase by less than expected.

The Average Increase in a Home Price

For the three years surrounding the presidential election (the year before, during, and after), we noticed that:

  • The year before an election home prices rose by 6 percent.
  • During the election year home prices rose by 4.5 percent.
  • After the election year home prices rose by 5.3 percent.
1.5% might not seem like a lot, but let’s place it in perspective.

In 2011, the average sales price of an existing home was $166,000. Normally your house would expect to gain $9,462 in price, but because of the election you gain only $7,462. That’s $2,000 you effectively lost because of the election.



How Can This Be?

The change in potential pricing got us thinking about why this might be. Our hypothesis: Presidential election years are stressful for the American people and in times of uncertainty people are less likely to take chances—this includes making large purchases such as a new house.

It’s a good theory. At least we thought so. After we patted ourselves on the back, we reached out to the National Association of Realtors (NAR) for some insight.

Walter Molony, a spokesman for NAR, scratched his head and came back with this response:

“We’ve observed no correlation between levels of home sales and an election year. The market responds to a wide range of economic factors, including jobs, interest rates and consumer confidence.”

But Molony did note something else. In the nation’s capital, when every couple of years scores of politicians and campaign staff come and go, it’s not unusual for home sales to jump.

So, what can we say? We aren’t sure. Election years, especially presidential election years, can be a divisive time in America. Family, friends, and neighbors might turn a cold shoulder to one another to commiserate among the politically like minded. And when it comes to housing, a particular brand of red, blue, or even green patriotism might sway people’s opinions.

The Effect of Presidential Election Years on House Prices

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posted on: May 18, 2012
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