Real estate: How the 2024 election could impact the market

Real estate economists are sounding the alarm about how the upcoming presidential election this November could impact the housing market. 

While the outcome could affect certain economic policies, the election cycle itself could cause some hesitation from buyers and sellers to jump into the market due to the uncertainty of what policies could be enacted, real estate economists tell FOX Business. 

The current state of the housing market, Redfin Chief Economist Daryl Fairweather warned, could also potentially affect who gets elected this fall. 

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Housing affordability is a pain point as consumers contend with persisting inflation and high interest rates. 

Last week, mortgage rates continued their upward trend this week, nearing 7%, exacerbating the affordability crisis. These high rates are not only dampening demand, but also limiting inventory. Sellers that locked in a low mortgage rate before the pandemic when interest rates were as low as 2.5% have been reluctant to sell.

Here is how the election year could impact the housing market. 

Affordability: 

Redfin Chief Economist Daryl Fairweather told FOX Business that the policies of a party in power can impact the affordability of homeownership. 

For instance, Fairweather said that the president and Congress could enact tax reforms that affect housing, including changing the mortgage interest deduction, the capital gains exclusion, the property tax deduction or the income tax brackets. 

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"They can also fund down payment assistance programs and other housing affordability measures," Fairweather said. "These changes can alter the incentives and affordability of homeownership for different segments of the population."

Realtor.com Chief Economist Danielle Hale argued that prices have risen in past elections, but that was because they have coincided with eventful years impacting the economy.

"With the notable exception of 2008, home sales and prices have gone up in every prior election year, but the macroeconomy more than the election is the key driver," Hale said. 

She noted that recent elections have fallen on the backdrop of a global pandemic in 2020, the Brexit referendum in 2016, and a global financial crisis and recession in 2008.

In 2012, Hale also noted that there was grave uncertainty stemming from a fiscal cliff, major health care expansion review by the Supreme Court and an Eurozone debt crisis, alongside the very close U.S. presidential election.

"Uncertainty is a regular feature of economic decision-making, and the election is just one more type of uncertainty to consider," Hale said.

Demand: 

Uncertainty over what a presidential election will mean for future economic policies can cause hesitation for some buyers and sellers, according to Fairweather. 

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However, this is usually only a "small factor" in the overall market, Fairweather added.

Though, "in Washington, D.C. where many people's jobs rely on a specific party being in power, the uncertainty of elections can have a large effect," she added. 

Similarly, Hale told FOX Business that while homebuyers and sellers are more cautious and hesitant, "data suggests that more often they choose to move forward." 

Re-election: 

Fairweather said that "Americans' attitudes about the housing market could hurt Biden's re-election chances if he doesn't deliver a persuasive message about how he will improve the housing market in his second term." 

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She noted that if inflation dissipates and mortgage rates fall, it "would make homebuying more affordable in the short run, which would be good timing for the election." 

However, in the long run, "it would increase demand and home prices because another key driver of the affordability crisis is a severe, ongoing supply shortage," Fairweather added. 

FOX Business' Megan Henney contributed to this report.