The Presidential Election and The Real Estate Market

Keeping Current Matters The Presidential Election and Its Impact on Housing

Every four years, as things start to heat up on the Campaign Trail, we get inquiries from our clients about what the election will mean for the market. It used the be the case here in Northern VA, that we would see a period of pausing, followed by a potential great transition and turnover of homes if a new party was elected to office.

Now that our economy in Northern VA is not solely reliant on the federal government, that is no longer the case. While we still have many government employees, government contractors and elected officials living here – we also have many large companies (for example tech firms), as well as many entrepreneurs and small business owners, many in the service industries.

CEO The Belt Team“If you’re thinking of buying or selling, give us a call, ” said Terry Belt, CEO of The Belt Team. We’ve been through every election cycle in Northern VA since 1972. In fact, a Presidential Election is part of what brought our family here from California. We’d be happy to share our expertise with you. Each Buyer and Seller faces a unique situation. And the conclusion about timing is not always black and white. Call us at (703) 242-3975.”

In the meantime, if you have been wondering about the market, you’ll want to read what our friends at Keeping Current Matters have to say. They gathered input and predictions from a variety of sources.

Every four years people question what effect the Presidential election might have on the national housing market. Let’s take a look at what is currently taking place. The New York Times ran an article earlier this week where they explained:

A growing body of research shows that during presidential election years — particularly ones like this when there is such uncertainty about the nation’s future — industry becomes almost paralyzed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner.

The research is even more persuasive on the final year of an eight-year presidential term, when a new candidate inevitably will become president.

We are seeing this take form in the latest economic numbers. However, will this lead to a slowdown in the housing market? Not according to Fannie Mae, Freddie Mac or the National Association of Realtors.

The Impact on Housing Throughout 2016 : Let’s look at what has happened and what is projected to happen by these three major entities.

National Association of Realtors
“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007.”

Freddie Mac
“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.”

Fannie Mae
“Consumers and businesses showed caution at the end of the first quarter…(but) Home sales are expected to pick up heading into the spring season amid the backdrop of declining mortgage rates, rising pending home sales and purchase mortgage applications, and continued easing of lending standards on residential mortgage loans.”

Bottom Line
Even during this election year, the desire to achieve the American Dream is greater than the fear of uncertainty of the next presidency.

Election Approaching . . . Is The Market Being Affected Already?

And so it goes. Last week we reported that the real estate markets in Oakton & Vienna were approaching balance. But if you’ve been following our blog, you know there has been constant fluctuation back & forth. And so this week, we go back to reporting that both areas are in Seller’s Markets. Inventory in both Vienna & Oakton dropped. And the number of homes that went under contract increased from the previous week.

In just 5 weeks, the Presidential Election will (finally!) take place. What we can tell you anecdotally from our experience is that elections have a psychological impact and activity often slows down before an election as the market seems to be on the fence and holding its breath. . . . and that after an election, this deep breath is usually slowly released as people get on with their lives and pursue their dreams & goals. This is part of why we saw inventory drop last week as we notice that a number of homes have been withdrawn from the market. (Buyers – if you’re worried about low inventory – ask your Realtor if he/she is searching & reaching out to owners whose listings have expired, been withdrawn & taken temporarily off the market. Make sure you have a proactive Realtor!)

Will this happen in Election 2012? That remains to be seen. In the meantime, we asked several of our Realtor Partners how they are advising their clients. Here’s what they had to say:

Mary Jane Perry said, “Right now, people are still buying homes at historically low interest rates.  And it is the “supply and demand” of our area that is dictating the price of homes, not the anticipation of who will lead in November.  Why would a buyer want to wait until November or even January when there is a real possibility they can be comfortably living in their Northern VA dream home financed by a 30 year mortgage at an awesome interest rate today?”

Many people think that a change in administration would bring an immediate bump to the Northern Virginia real estate market. The fact is that our region is so large that the influx of politicos with a new administration does not have a meaningful statistical impact on the overall market. However, remember that real estate is local. This means certain local micro-markets would see a positive benefit. For example, Northern Virginia neighborhoods with good access to Capitol Hill in areas like Arlington, close-in Alexandria & close-in McLean would likely see the most increased activity.

However, it’s not just about whether a new administration comes in. It’s about the overall economy, interest rates, regulatory changes and more.

There is no time like the present. The Northern Virginia real estate market is healthy. And that’s good for both buyers & sellers,” commented Candice Fathi, “No one can predict what will happen the day after Election Day.”

Krissy Cruse echoed that sentiment, “Regardless of which party wins the presidency, we’ll be seeing changes to Fannie Mae, Freddie Mac and possibly Frank-Dodd. While there are numerous scenarios of how that would affect the real estate market, we can bet for sure that things will be different. The buyers and sellers I work with feel the time is now.

Regardless of what happens, its remains vital for buyers & sellers to work with Realtors who have their finger on the pulse of the local market they are buying or selling in. When the market psychology is unsure, as it is at election time, we often see rapid changes in market conditions. Don’t wait until you read about them in the newspaper as the traditional media often reports either a “macro-picture” versus a “micro-picture”, or what they are reporting is based on published statistics that often lag the market.

(For example – listen to this broadcast of Real Estate Radio Washington. Belt Team Partners Catharine Via, Jennifer Riddle & Pauline Knipe discuss the state of today’s Northern VA real estate market and what strategies buyers & sellers can employ to maximize their success.)

That being said – let’s see where the Vienna & Oakton real estate markets are this week!

Last week in Vienna Real Estate (22180,22181, 22182):

Search Homes For Sale in Vienna

  • Number of Contracts: 17
  • Average Days on Market for Active Listings: 116 days
  • Average Days on Market for Listings That Went Under Contract: 72 days
  • Inventory: 184 homes on the market
  • Number of Months Supply of Homes (Based on past 90 day contract rate): 2.7 months
  • Number of Months Supply of Homes (Based on past 30 day contract rate): 2.9 months

Last week in Oakton Real Estate (22124):

Search Homes For Sale in Oakton

  • Number of Contracts: 5
  • Average Days on Market for Active Listings: 93 days
  • Average Days on Market for Listings That Went Under Contract: 83
  • Inventory: 75 homes on the market
  • Number of Months Supply of Homes (Based on past 90 day contract rate): 2.9 months
  • Number of Months Supply of Homes (Based on past 30 day contract rate): 3.3 months

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If you’re thinking of buying or selling a home, Contact The Belt Team at (703) 242-3975.