In Boise, Idaho, Kristin Carlson wants to buy her first house. Carlson saved up for a down payment on a house, thinking she’d start the process this spring. She had already tried her hand at the stock market and paid off her debts.
The 39-year-old woman, who works in digital advertising, called the same Boise real estate agent who helped her parents buy a house in 2022. It was important to her that the single-family home she chose had two or three bedrooms and cost $450,000 or less.
Her search was put on hold, though, not long ago. Carlson said of the items she saw, “I was just kind of underwhelmed.” She also said that she didn’t think the market would do very well because of the upcoming election and the fact that mortgage rates were about to go down.
Carlson said, “I don’t have to sell a house, I’m not losing equity, and I don’t have to move—I can move whenever I want.” At the moment, Carlson is renting from friends. “Then why not wait?”
Carlson isn’t the only one who wants to wait and see. Even though there are more homes for sale in many big areas, mortgage rates have gone down, and home prices have stopped rising to all-time highs, buyers aren’t exactly rushing back into the market.
Most of the time, home sales slow down in the fall, but buyers this year seem extra cautious. Some buyers are putting off what could be the biggest purchase they ever make because they don’t know what will happen with the presidential election, the U.S. economy, or the new rules for buying a home that came about because of the National Association of Realtors’ lawsuit. Also, there is a chance that the Federal Reserve will lower interest rates soon.
In August, the number of mortgage applications dropped to its lowest level since October 2006, when rates were close to 8%. Thomas Ryan, an economist at Capital Economics who focuses on North America, wrote in a note that the drop in applications was “puzzling” because it came after rates dropped sharply.
Nicole Stewart, Carlson’s real estate agent, told MarketWatch that the fact that she chose to wait wasn’t a big surprise. Stewart has been in the real estate business for ten years and works for Redfin RDFN -3.62%. He said that there is usually a slowdown around election time.
“No one knows what will happen.” “People are less likely to make big purchases when they don’t know what will happen,” she said. “Be it cars or homes, they don’t make many big changes in their lives until they are comfortable.”
Many people who want to buy a home say they’re waiting to see how the election goes before they make their plans, even though the winner has no direct effect on the market right now.
“I hear it all the time,” said Scott Goshorn, a real estate agent with Rodeo Realty in Los Angeles. “I feel like a lot of people are on the outside.” Goshorn has put videos on social media sites to comfort buyers who are feeling “election-year jitters.”
People often tell Goshorn that they “just want to see how the election goes” and don’t want to vote because they “don’t know what’s going to happen.” He did say, though, that there is proof that election cycles don’t have much of an effect on the housing market. “The numbers don’t lie: sales of existing homes have gone up nine times out of eleven election cycles.” “Middle-range home prices have gone up seven times out of eight,” he said.
An agent in Colorado named Matthew Purdy wrote on the Redfin blog that some buyers say they’ll only buy a house “if their candidate wins.” “Others are waiting because they think the economy and housing market are unstable and think things will get better after the election.”
Younger people care a lot about housing.
Even though presidents don’t have much direct control over home prices, a recent poll found that the problem of housing affordability will have the most impact on the 2024 presidential election choices of younger voters.
The cost of buying a house has gone up for many: In July, the median price of a home went up by a small amount to $422,600. This was the highest price ever logged for July. The Mortgage Bankers Association says that the average monthly mortgage payment across the country in July was $2,140.
The two candidates for president have both said they will do something about the high cost of living. The Democratic candidate, Kamala Harris, has said that she will increase the number of homes available by building three million new homes over the next four years. She has also said that her administration will help first-time home buyers with their down payments by $25,000 each.
A speech he gave at the Economic Club of New York by Republican Donald Trump says he would lower the cost of living by deporting illegal immigrants.
The former president and real estate developer also talked to Bloomberg and said that cost of government rules like zoning laws and building permits is one reason why housing costs have gone up. He made it sound like he thought that “we’ll be bringing the price of housing down” by changing the rules about zoning. He also said that high interest rates are “the biggest problem with housing,” which is something that leaders can’t change.
Do people wait to buy big-ticket things before an election?
Even before the election and the new rules for buying a home made buyers even less sure, the current housing market was one of a kind. It’s very expensive to buy a home right now because there aren’t many homes for sale and mortgage rates are high.
Since mortgage rates were very low for a while, many people looking for homes are now finding that there aren’t many homes for sale. Part of the reason for this is that people who already own homes don’t want to sell because they don’t want to give up their low mortgage rates. Even though the number of homes for sale is slowly growing, some homeowners are still having a hard time finding options that meet their needs and budget.
This has caused a drop in home sales. Month-to-month home sales hit an all-time low in July, even though mortgage rates were at their lowest level in sixteen months.
These changes in the market may be making buyers more hesitant than worries about the election year.
A lot of different studies disagree on whether or not people actually spend less on big-ticket things before an election.
In a poll by Cox Automotive, 60% of people said that the election in November will affect the next car they buy.
She said, “Consumers seem to think the next U.S. election will have an effect on the economy, interest rates, and even inflation.” Vanessa Ton is a senior manager at Cox Automotive. “Many people are taking a “wait and see” approach because of the high level of uncertainty.”
In the same poll, however, only 23% of people said that the election would make them wait to buy other big-ticket things, like vacations, houses, and appliances. 62% said that the election would not affect their decision to buy.
A different study that looked at home sales in years with and without an election for president found that election doubt doesn’t have much of an effect.
A study by the housing consulting group John Burns Research & Consulting found that the data doesn’t support the anecdotes that buyers are hesitant to buy homes because of the political environment.
The study’s writers said that the number of buyers saying they were delaying a home purchase because of the election was probably “an overstatement.” On the other hand, 92% of consumers said they were not delaying a home purchase because of the election.
“Of course, some buyers will put off buying homes because of politics, and these buyers tend to be vocal about why they are doing this, making it seem like they have a bigger effect than they really do,” the authors wrote. “Be careful not to overstate how much these buyers affect housing demand when the numbers show otherwise.”
Ready for home prices to go down
People who aren’t sure about buying have nothing to do with economic or political worries. The main thing they want to know is if they can even buy a house.
Lincoln Scott, who is 29 years old, decided not to buy a second home because of rising home prices rather than not knowing what would happen in the election. He thought that politics only had a 5–10% effect on his choice to buy a house.
The tech consultant bought his first home by Smith Mountain Lake in the Roanoke area of Virginia in 2021. He then decided he wanted to move to Knoxville, Tennessee, which has a lot more people. After making a careful budget, Scott saved $50,000. This was enough for a down payment on a Knoxville single-family home worth $250,000.
Because he had spent hours on real estate agent websites and learned a lot from buying his first home, Scott planned to look for homes that were on sale and below his price range. This way, he would have room to negotiate. He planned to look at four homes in five days at the beginning of September to get a feel for the Knoxville market.
Like Carlson, he was going to wait to buy, but not for the same reason. From what he knows about the real estate market, he thinks prices will drop to a level that’s good for him as early as November or as late as February of next year.
Scott said, “I’m good with numbers.” “Chose the right house is important to me…” I know that prices will go down a little because of the time of year.
“Being in the best place to make an investment”
Carlson is worried about the future of the U.S. economy back in Boise, which is why she has decided to wait to buy her first home.
While the 39-year-old grew up in Sonoma County, California’s wine country, he moved to Boise in late 2020 and has been renting an accessory dwelling unit on a friend’s property for $450 a month. This is a great deal in Boise, where the average rent for a one-bedroom was $1,400 as of September, according to Apartments.com.
Because Carlson can rent for a lot less than the going rate, she can wait until she is more sure about the direction of the economy and the stability of the home market.
Boise home prices have, without a doubt, leveled off. While prices were going up quickly at first, they were 1.5% lower in July than they were at the same time last year, according to Redfin. The typical sale price was $505,000. In 2019, the range of prices was only $330,000.
Carlson thinks there is a link between the economic health of the U.S. and the people who run the government. “The policies of the last three or four years have had a very bad effect on our economy,” she said. “And the prices of food and gas have gone through the roof.” As well as having some to do with the state of our business.
Carlson thinks that a new government could make it easier for people to invest in real estate. “If the right chance doesn’t present itself, I’m going to sit in the back row and watch how this election year plays out. Then I’ll start looking for opportunities in the beginning of 2025.”
