TODAY!!! Americans are deciding our President for the next four years. That decision may have an impact on many aspects of life in this country, but the residential real estate market will NOT be one of them.
Analysts will try to measure the impact feasible changes in regulations might have on housing, the effect of a possible first-time buyer program, and any number of other situations based on who wins. The housing market, however, will remain strong for four reasons:
1. Demand Is Strong among Millennials The nation's largest generation began entering the housing market last year as they reached the age to marry and have children - two key drivers of homeownership. As the Wall Street Journal recently reported: “Millennials, long viewed as perennial home renters who were reluctant or unable to
buy, are now emerging as a driving force in the U.S. housing market’s recent
recovery.”
2. Mortgage Rates Are Historically Low All-time low interest rates are also driving demand across all generations. Strong demand created by this rate drop has countered other economic disruptions (e.g., pandemic, recession, record unemployment).
In addition, Freddie Mac just forecasted mortgage rates to remain low through next year: “One of the main drivers of the strong housing recovery is historically low mortgage interest rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”
4. History Says So Though it’s true that the market slows slightly in November when it’s a Presidential election year, the pace returns quickly. Here’s an explanation as to why from the Homebuilding Industry Report by BTIG:
“This may indicate that potential homebuyers may become more cautious in the face
of national election uncertainty. This caution is temporary, and ultimately results in
deferred sales, as the economy, jobs, interest rates and consumer confidence all
have far more meaningful roles in the home purchase decision than a Presidential
election result in the months that follow.” Ali Wolf, Chief Economist for Meyers Research, also notes: “History suggests that the slowdown is largely concentrated in the month of
November. In fact, the year after a presidential election is the best of the four-year
cycle. This suggests that demand for new housing is not lost because of election
uncertainty, rather it gets pushed out to the following year as long as the economy
stays on track.”
Our Private Backyard Chat There’s no doubt this is one of the most contentious presidential elections in our nation’s history. The outcome will have a major impact on many sectors of the economy. However, as Matthew Speakman, an economist at Zillow, explained last week: “While the path of the overall economy is likely to be most directly dictated by
coronavirus-related and political developments in the coming months, recent trends
suggest that the housing market – which has basically withstood every
pandemic-related challenge to this point – will continue its strong momentum
in the months to come.”
Don't hesitate to contact me about your questions in the UTAH housing market. The market is moving and moving fast!
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