Presidential elections have historically had little or no negative impact on the California housing market, according to a study by the California Association of REALTORS® (C.A.R.).
"Transitory political events such as presidential elections don't drive the housing market," said C.A.R. President Pat "Ziggy" Zicarelli. "Market fundamentals such as housing inventory, affordability, interest rates, job growth and consumer confidence are the real factors that influence the housing market."
In an analysis of home sales dating back to 1990, C.A.R. found the average growth in home sales during an election year is usually either slightly higher or lower each month than in non-presidential election years. Notably, sales growth is rarely negative during an election year, and there is no evidence of a systematic negative impact on home sales or prices stemming from election season. In fact, the state Realtor group's study found growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points.
On a monthly basis since 1990, California home sales contracted by roughly 2 percent during the last four months of the year. However, during the past five election cycles, sales in the final months of the year picked up, rising by 5.3 percent on average compared with -1.8 percent during non-election years. With the exception of December 2004, every single month of the final quarter saw robust growth in home sales during election years.
The pattern for California home prices is similar. The C.A.R. study found little evidence of a negative effect on home prices during an election year. In fact, home price growth in California during the past five election cycles was slightly better than the long-run average of 5.6 percent. Again, the effects were most pronounced during the final months of the year when demand – and therefore, upward pressure on prices – rose by roughly 5.6 percentage points following the elections.
In a separate poll conducted by think tank The Futures Company in partnership with the Center for California Real Estate, a C.A.R. institute dedicated to the advancement of real estate knowledge, nearly three-fourths (70 percent) of survey respondents who plan to buy a home agreed they would like the current presidential candidates to address how to make housing more affordable in their campaigns. Across all incomes, generations, and races/ethnicities, consumers were strongly in agreement that housing affordability should be a top priority on the presidential campaign trail.
"In a presidential election year, the government does everything in its power to keep the national real estate market at least at a plateau, if not growing. Besides releasing plans to increase the low homeownership rate, housing affordability and reducing the cost of living have received little attention this campaign season," remarked Karen Trolan, president of the Silicon Valley Association of REALTORS®.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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