The Election and the DMV Housing Markets
Every four years the citizens of the United States boldly march to the polls to exercise their constitutionally-protected right to make their voice heard, and every four years homeowners and potential buyers around the DMV ask “How will this affect the housing market?”
For that answer, you’ve come to the right place.
The information in the chart to the left was compiled by the National Association of Realtors, and focuses on home sales in the DC area each year from November to March between 1988 and 2016. Those sections with arrows indicate election years and the winning candidates. Additionally, in the full study the data is broken down to reflect three different subsets of the local market:
-Washington DC Proper
-Those counties that lie within the Beltway in DC, Maryland, and Virginia
-The Broader DMV metro region
In a typical non-election year, the housing market slows a bit during the winter period, as there are both fewer listings and fewer buyers, and many individuals travel for the holidays. By focusing specifically on this period, we get a picture of what happens immediately following the election and into the beginning of the elected president’s term. This is important as an administration’s hiring and appointment process spans a similar timeframe, with the expectation of having most new officials installed by early spring.
As an example, we can see home sales rose 25% in Washington DC during President Obama’s first year in office, when compared to the previous year, which was President Bush’s final year in office. The full study can be found here.
2016/2017 was no different. As per usual, the local housing market was quite “cool” in the weeks leading up to the election, with many sellers waiting to list after the results were known, and 24/7 election news wasn’t clogging the airways and local conversations. Then, as happens every four years, the market activity began buzzing, as many homeowners listed in hopes of a newly appointed cabinet member or secretary being the perfect buyer (a similar phenomenon happened during the Amazon HQ2 craze).
However, as the chart below shows, the buzz wasn’t exactly misplaced, especially within the District. The same story rang true across the entire metro region as well, albeit with smaller peaks and valleys. While the outer markets don’t see quite the same swing in terms of reduced sales in the election year, it’s quite clear there is a bump in the following year, indicating those officials moving into town aren’t just focused on DC, but make their way into the suburbs as well.
This year has been interesting in many ways, but none more so than the pace at which the housing market has continued to climb, even as the pandemic raged on. Historically low interest rates, and a yearning for many homeowners (especially condo-dwellers) to find more space, has lead to record-setting sales in 2020. While it seemed mortgage rates couldn’t possible go any lower, already this month they set a new record at 2.78% on Thursday, 11/5/20. Where can we expect rates to go in the coming months? No one truly knows.
Given what we do know about previous market trends, and heading into what appears to be a full party/administration turnover, Realtors appear poised to be quite busy in the coming months. The rings especially true of those who list in the luxury markets, as the current administration brought in several high net-worth individuals who likely won’t find DC quite as appealing once the new administration takes over. Additionally, this will almost certainly prove to be a gentle push to those sellers who have been on the fence about listing their own homes. All in all, the local market appears to be headed in a very positive direction in the coming months.
As always, if you have more specific questions about what to expect in the coming months, don’t hesitate to reach out, and be sure to subscribe to the monthly newsletter to stay up-to-date on everything that is happening around the region.
Many thanks to The National Association of Realtors for funding the study referenced above.
For a recent analysis of the Virginia housing market, click here.
