History tells us that presidential elections often cause markets to "stall and take a breather." This cyclical uncertainty can cause even the most motivated buyers to hesitate before making a final decision on a home purchase.
As we approach the end of 2020, a "wait and see" attitude has developed across the national and local real estate landscapes. Here is why the political climate is currently weighing so heavily on the market.
The "Wait and See" Strategy
When a new administration is on the horizon, consumers naturally want to see what policy changes may be put into place. Potential shifts in the following areas often keep buyers on the sidelines:
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Tax Laws: Changes to capital gains or property taxes.
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Deductions: Adjustments to mortgage interest deductions.
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Credits: New incentives for first-time homebuyers.
Until these decisions are finalized, many buyers feel it is safer to watch from the periphery rather than commit to a long-term investment.
Compounding Factors in 2020
This year, the typical election-year jitters are compounded by two unprecedented factors:
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The National Economy: A fluctuating landscape as industries adapt to a new normal.
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The Pandemic: The overarching question of a safe vaccine in 2021 and its subsequent impact on public mobility and consumer confidence.
The Market Abhors Uncertainty
All markets—including real estate—react poorly to uncertainty. Right now, there is a lot that we are not feeling certain about. However, understanding that this "breather" is a historical pattern can help both buyers and sellers maintain a long-term perspective.
Good luck in the days ahead, and remember that even in uncertain times, the fundamental value of a home remains a constant.
