Presidential elections have historically had little or no negative impact on the California housing market, according to findings by the California Association of Realtors.
"Transitory political events such as presidential elections don't drive the housing market," said CAR 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, 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, CAR found that 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% 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% on average compared with -1.8% 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. CAR also 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%. Again, the effects were most pronounced during the final months of the year when demand high and, therefore, upward pressure on prices high. Prices were boosted by roughly 5.6 percentage points following the elections.
In a separate poll by The Futures Company, a think tank firm commissioned by CAR, nearly three-fourths (70%) of survey respondents who plan to buy a home agreed that they would like the current presidential candidates to address how to make housing more affordable in their campaigns.
And, 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 as candidates make their pitches for ballots in the lead-up to the November contest.
However, housing affordability and solutions to reduce the cost of living have received noticeably little attention this campaign season. Other than releasing plans to increase the five-decades-low home ownership rate, the presumptive nominees, Democrat Hillary Clinton and Republican Donald Trump, have not issued comprehensive housing policies, including action items to address the significant housing affordability crisis.