Trump vs. Biden: How Does the 2020 Election Affect Real Estate?

The economy has been hit hard by the coronavirus and there’s no end in sight. The Federal Reserve is pouring money into the stock market and they aren’t raising interest rates - which is great for those looking to make big purchases, like buying a house. 

Homelight asked more than one thousand real estate agents, many of which are San Diego real estate agents, to share their election predictions in their 2020 Q3 survey. Here’s what they had to say.

Fewer transactions but at higher prices

At the time of writing this, 92% of surveyed agents report their local market is experiencing a strong seller’s market. When you factor that in with the fact that during an election year, we normally see housing prices increase, albeit slowly.

The housing consultancy firm, Meyers Research, discovered that the number of real estate transactions dropped by 15% during October and November of an election year. Despite this, housing prices have increased by 7.4% over the past year and it will increase by another 7.3% in 2021. San Diego’s housing market has already experienced a dip in sales and it’s believed the low interests may boost transactions in the future.

Housing prices skyrocket in one particular region

Real estate activity slows around the nation, but there’s one region that seems to be immune to this decline. In 2015, the National Realtors Association released data that showed housing prices typically increases by 12% in the  Washington DC metro area. What’s truly interesting is that housing prices tend to rise by an additional 10% in the following year!

Presidential uncertainty

There are a lot of residential real estate industry policies that need to be addressed in 2021, regardless of who wins the election. Agents are concerned about access to affordable housing (27.7%), diversity, fair housing and racial equality in real estate (9.8%), and mortgage and foreclosure relief due to the pandemic (9.7%). With the poor coronavirus response and a lack of stimulus for the people and housing market… it’s understandable that the market is nervous.

Deductions, real estate credits, and tax rates change

Homelight’s survey reveals 25.7% of agents believe tax breaks for homeowners are going to play a big role in how well the real estate market does after the election. With Trump in office, homeowners could benefit from the Tax Cuts and Jobs Act. However, they’re nervous that a Biden administration could take away or reduce those tax breaks. And for people thinking about buying, they may wait to see who wins and if the policy remains intact, as it would mean they could claim $10,000 in property taxes when tax season comes.

Buyers face slim pickings regarding available houses

Even though many agents say they’re experiencing a seller’s market and activity has even increased to a pre-pandemic high of 77%, 87% of those surveyed say their inventory is much lower than anticipated. Fortunately the limited inventory is likely to be a short term problem, 33% of agents believe their market will rise during the next six months. 

Which presidential candidate is better for the housing market?

Much like everything else that’s happened in 2020, we can’t say for sure what the possible outcome will be after the 2020 election. However, 52% of real estate agents feel that it’s going to be a good thing for the market if President Trump manages to get re-elected - only 8% of agents expect to see performative changes under a Biden administration. 

It doesn’t matter who wins, real estate agents and the rest of us will need to pay attention to the federal policies we mentioned. Those policies will be the big factors in how the housing market will pan out in 2021.

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