Impact of Election Cycles on Real Estate Market: A Historical Analysis

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The Impact of Election Cycles on the Real Estate Market: A Historical Analysis

WHAT'S YOUR HOME WORTH?The real estate market is influenced by various factors, and one intriguing aspect is how it responds during election cycles. In this article, we will delve into the past four election cycles and explore the historical trends in pricing, sales, and mortgage percentage rates. Additionally, we will address the question of whether interest rates typically decline in the first and second quarters of an election year.

Understanding the Real Estate Market During Election Cycles: Election cycles can create uncertainty and affect consumer confidence, which, in turn, may impact the real estate market. However, it is essential to note that numerous factors beyond elections can influence the market as well, such as the overall state of the economy, supply and demand dynamics, and government policies.

Election Cycle 1: 2008

During the 2008 election cycle, the real estate market experienced significant turbulence due to the global financial crisis. The housing bubble burst, leading to a decline in home prices and sales. The average 30-year fixed mortgage rate during this period was approximately 6.03%.


  • Election Cycle 2: 2012

  • In 2012, the real estate market began its recovery from the recession. Home prices and sales started to rise gradually, reflecting an improving economy. The average 30-year fixed mortgage rate during this period was around 3.66%.

  • Election Cycle 3: 2016

  • The 2016 election cycle witnessed a stable real estate market characterized by steady growth in home prices and sales. Mortgage rates were relatively low, with an average 30-year fixed rate of about 3.65%.

  • Election Cycle 4: 2020


The most recent election cycle occurred during a unique period marked by the COVID-19 pandemic. The pandemic initially caused disruptions in the real estate market, but it quickly rebounded as remote work and low-interest rates fueled demand. Home prices soared, and sales surged despite the challenging circumstances. The average 30-year fixed mortgage rate during this period was approximately 2.81%.

The big question:

Do Interest Rates Typically Decline in the 1st and 2nd Quarter of an Election Year? While election cycles can influence interest rates, it is important to note that they are not the sole determining factor. The Federal Reserve, economic indicators, and global events also shape interest rate movements. Here are some reasons, in my opinion, they should:

Stimulating the housing market:

Lower mortgage interest rates can make borrowing more affordable for prospective homebuyers. This can increase demand for housing, leading to increased home sales and construction activity. A vibrant housing market can have positive ripple effects on related industries such as construction, real estate, and home improvement, which can contribute to economic growth.

Consumer spending:

Lower mortgage rates can free up funds for homeowners with existing mortgages, as they may refinance at lower rates, reducing their monthly mortgage payments. This can increase disposable income and potentially stimulate consumer spending on other goods and services, boosting economic activity.

Investment and business activity:

Lower mortgage rates can encourage businesses and investors to consider real estate investment or expansion, as borrowing costs become more favorable. This can result in increased commercial real estate development and investment, potentially boosting job creation and economic growth.

Financial stability:

While lower interest rates can incentivize borrowing and stimulate economic activity, it's crucial to consider the potential risks associated with excessive debt. A careful assessment of the overall economic conditions and financial stability is essential to avoid creating asset bubbles or unsustainable borrowing patterns.

Generally, the Federal Reserve has the authority to adjust interest rates based on economic conditions and goals such as inflation control and job market stability. Consequently, interest rates can fluctuate independently of election cycles.

In recent years, the Federal Reserve has pursued a policy of keeping interest rates low to stimulate economic growth. However, the specific timing and extent of these rate adjustments can be influenced by a range of factors beyond election cycles.

Analyzing the historical trends in the real estate market during the past four election cycles, we observe the impact of various economic and external factors. While the 2008 cycle faced a downturn, subsequent cycles exhibited varying levels of stability and growth. It is essential to recognize that interest rates are influenced by multiple factors, and their movements during election cycles cannot be generalized. To make informed decisions, buyers and sellers should consider a broader range of economic indicators and consult with real estate professionals.

As always, it is crucial for potential home buyers and sellers to stay up-to-date with current market conditions, seek advice from professionals, and evaluate their individual circumstances before making any real estate decisions.

Will the current administration lower mortgage rates to boost the economy headed into the 2024 election? The jury is still out...

Listing your home now might be the smart move. As we could see rates lower and more inventory, prices trending lower could follow. What's your home worth?

Mark Zabilowicz

Mark Zabilowicz

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