C.A.R. analysis finds presidential elections have little impact on California housing market
Prospective home buyers want current presidential candidates to address housing affordability
Presidential elections have historically had little or no negative impact on the California housing market, according to findings by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
“Transitory political events such as presidential elections don’t drive the housing market,” said C.A.R. 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, C.A.R. 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 percent 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 percent on average compared with -1.8 percent 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. C.A.R. 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 percent.
The effects were most pronounced during the final months of the year when demand – and therefore, upward pressure on prices – were boosted by roughly 5.6 percentage points following the elections.