Most people believe when a new administration comes into office after an election, the floodgates open and there is a frenzy of new inventory on the market. They think new buyers are moving into town snatching them up.
In reality? There are about 7,000 political appointments to be made – but most don’t come from out of town. Many people who are hired to be a part of the new administration are, as they say, “Washington insiders,” already living in the area regardless of who is in power. Some that come to work in the administration will keep their homes in their home state and return after they serve. They primarily end up renting while in D.C. So these new area residents don’t really affect the housing market either way. The change in administration causes a small bump – but it is not significant in the re-sale sector.
But, elections do have an impact on the D.C. housing market.
Traditionally, we will see a later start to the fall market, which normally begins in mid-September. In presidential election years, things tend to stay a bit quiet until the election. Then, we usually see a very active November and December, months that are usually quiet in non-presidential election years.
Why? Three reasons.
Of course, our area is home to a very high percentage of people that work in and around politics. It’s fair to say they are often preoccupied with presidential and congressional races. This is one factor.
However, a bigger factor is non-political federal government employees. Campaigning in the last few elections has meant talk of reducing the deficit and cutting government programs. Such discussions give many federal employees pause. Will their department be reduced or cut? The same holds true for government contractors.
Something similar happened during the government shutdown. We saw the market come to a crawl when government workers – who have always felt secure in their positions – start to worry their jobs weren’t as secure as they always believed. While federal employment is stable compared to many other sectors, elections tend to shake that up a bit. Once the election is over and the results sink in, things can open back up.
The biggest factor in a slower fall market is general lack of stability and an abundance of negativity. The more negative the campaigns, the more insecure the general population feels both in D.C. and around the country. This insecurity can negatively impact the real estate market.
People buy houses when they are happy and confident. With the 24-hour news cycle, that happy, confident feeling has become more difficult to achieve in an election year.
So, how does the Clinton v. Trump election compare to past elections? Much is the same – but perhaps with some more uncertainty.
The change in administration will continue to be an almost non-issue. However, as we have seen, this race is anything but ordinary. Both candidates propose increases in government spending. Regardless of whether you believe this is a good or bad thing for our country, it does bode well for those in federal government positions, and in turn for our local real estate market.
On the other hand, Trump’s ongoing battles with the “Washington political elites and insiders” might mean more people coming into the area and fewer D.C.-area politicos being picked for appointments. Or, perhaps not. One never knows. But even if that were the case, as mentioned above many of these appointees from out of town decide to rent so the impact won’t be too great.
The lower approval ratings of both candidates, combined with instability around the globe, do hint at a slower fall market. Though it’s early in the election, this race already promises to be negative, which doesn’t help with consumer confidence.
On the positive side, we have not seen a slow-down as of yet, other than the typical congressional recess slow-down, which happens every year. We will be keeping a close watch on the campaigns, the stock market and the reactions of our clients.
Regardless of what happens in the lead-up to the election and if we end up having a President Clinton or a President Trump, we anticipate a busier than normal November and December, once campaign ads are replaced with ads for holiday shopping.