How the 2024 Election Could Impact the Real Estate Market: What Buyers, Sellers, and Investors Need to Know

As the 2024 election approaches, many are wondering how potential changes in leadership and policy could impact the real estate market. Major elections often lead to shifts in economic policies, which can bring about both opportunities and challenges for homebuyers, sellers, and investors.

In this article, we’ll explore some of the key issues at play this election cycle, look at trends we’ve seen in previous election years, and offer practical advice for navigating the market in uncertain times.

The Real Estate Market Before the Election

Right now, the real estate market is facing significant headwinds. High interest rates, inflation, and affordability challenges have made buying a home a complex decision for many. In response, the current administration has pushed for policies focused on affordable housing and rent control. However, depending on the election’s outcome, these policies might shift, which could have a direct impact on financing options, housing demand, and more.

In the lead-up to the election, the market typically sees a bit of a slowdown. Many buyers, sellers, and investors adopt a “wait-and-see” approach, holding off on big decisions until they have a clearer picture of the policies that will shape the market.

Key Election Issues Affecting Real Estate

As we look at the potential impacts of this election cycle, several critical issues stand out:

• Interest Rates: While some candidates are proposing policies that might help stabilize or lower rates, others support the current Fed approach to managing inflation. This could mean interest rates remain high for the foreseeable future, which would continue to affect buyer affordability.

• Affordable Housing Initiatives: Both parties have plans to address housing affordability, but they differ in their approaches. Some propose government-funded affordable housing projects, while others are looking at tax incentives for developers to build lower-cost units. These policies will shape the availability and cost of housing in the years to come.

• Tax Policies: Changes in tax policy could impact real estate significantly. Proposals affecting tax deductions, property taxes, and capital gains are particularly relevant to investors. Additionally, potential changes to the 1031 exchange rule, which allows investors to defer taxes on real estate transactions, could alter how investors approach buying and selling property.

Real Estate Trends During Election Years

In many election years, the real estate market experiences a temporary cooldown. Uncertainty surrounding potential policy changes often leads to hesitation among both buyers and sellers. Many sellers choose to delay listing their properties, and buyers may wait, hoping for a post-election decrease in rates or new housing incentives.

This pattern can lead to tighter inventory in the months leading up to the election. Afterward, as confidence stabilizes, we often see increased activity as people feel more certain about their financial futures.

The Post-Election Market: What to Expect

Once the election results are in, the real estate market is likely to experience some shifts:

• Psychological Boost: The election’s resolution can bring a sense of stability to the market, leading to increased buyer and seller activity as confidence returns.

• Policy Shifts: Depending on the new administration’s priorities, we may see changes in housing incentives, tax policies, or interest rate management. Any new policies directly targeting housing affordability, lending practices, or tax breaks for buyers and investors will have a tangible impact on demand and affordability.

• Interest Rates: If new policies influence the Fed’s approach to interest rates, we could see shifts that might benefit or further challenge affordability. Lower rates would, of course, make financing more accessible, but any increase could further limit buyers’ purchasing power.

Key Takeaways for Buyers, Sellers, and Investors

Here’s what you should consider as we approach the 2024 election:

• For Buyers: While waiting may seem appealing, remember that policies might take time to enact, and rates may not necessarily drop immediately. However, it’s wise to stay informed on proposed changes that could make buying easier or more affordable.

• For Sellers: If you’re considering listing your home, doing so before the market becomes more competitive might benefit you. Election uncertainty can tighten inventory, but a post-election surge in listings could bring more competition.

• For Investors: Pay close attention to potential changes in tax policy, as these can significantly impact your investment returns. Capital gains taxes and 1031 exchanges are two areas that might see shifts depending on the election outcome.

Stay Informed to Stay Ahead

The 2024 election could bring both opportunities and challenges for the real estate market, and staying informed is key to making the best decisions. If you’re thinking about buying, selling, or investing and want to talk about how the current political climate may affect your plans, feel free to reach out. At McCord Realtor, we’re here to help you navigate these complex times.