The issues that are centered around an election typically revolve around social issues, job growth, and global politics. Government policies that are put in place can also have a significant impact on real estate. Many people believe that the real estate cycle has matured and with the election around the corner the impact could be heightened. Could current real estate fundamentals strengthen further or weaken after a new administration takes office in January?
The economy and the stock market are leading issues that affect fundamentals of the property market. It is important to remember that party affiliation does not offer any easy clues about which candidate might strengthen or weaken it. Statistically the party affiliation of the POTUS does not have a significant impact on U.S. equity markets. That being said, Presidential races and volatility often go hand in hand. Elections are times of uncertainty that sometimes lead to volatility in many markets. For instance, the FTSE NAREIT All REIT index has dropped steadily during the past three months. A number of factors, some of which may be related to presidential election uncertainty and broader market volatility, have likely contributed to this weakening performance.
Interest rates are another concern. The upcoming election may have influenced the Fed’s recent decisions not to raise rates thus far. Not raising rates have been beneficial to many borrowing to buy a home and has definitely perpetuated much of the growth in real estate in recent years since the Great Recession. Some say a rate hike is overdue and could occur after the elections in December, but few expect a rapid increase in interest rates.
The 2016 presidential race has already offered plenty of surprises. However, ongoing divisions in Congress will likely restrain the abilities of both the Democrats and Republicans to enact proposed policies that may affect real estate in any impactful way. This election may not have any significant effect on the real estate industry. Market volatility may subside after the election when much of the uncertainty is removed. For most Americans, focusing on the long-term perspective is the most effective way to prepare for any volatility this presidential season.
The Monica Betancourt Group, “MBG”, is a group with members who are fluent in not only several languages but also fluent in several different cultures. This fluency gives us a deep understanding of the expectations of both local and foreign buyers and investors. Contact Us: 305.632.7248