Do Presidential Elections Affect The Housing Market?
Sales for Sun Valley’s high-end market, or homes priced above $2M, are for the first three quarters of 2016 down substantially from the same period last year. Thirty homes sold for over $2M in 2015; this year we have had twelve to date, with a few more pending. Unless we get a huge bounce in the fourth quarter, we will see a dramatic drop in sales volume in the Sun Valley luxury market this year. In speaking with fellow agents in Telluride, Aspen and Jackson, they have been telling me the same trend is happening in their luxury markets.
One of the main theories for this slow-down is this election, and upon doing more research, it appears that this phenomenon also occurred in 2012 and 2008. Fortunately, the housing market is way ahead of where we were in 2012, as is the rest of the economy. A range of studies have shown that election years create uncertainty; the uncertainty of who might win what they might do in office, and how that may affect not just the housing market but also housing prices and mortgage rates.
Friends in local retail, such as high-end boutiques and art galleries, have noted that customers were more reluctant to purchase high-ticket items this summer. Various studies, including one by Movoto.com, show that the uncertainty produced by the presidential race can have more impact on housing and the economy than the actual outcome in November. The Movoto study hypothesizes that election years are stressful and make buyers uneasy about high-ticket items, especially homes.
So what does this mean for buyers? This could be an excellent time to buy a home in Sun Valley. Buy like Warren Buffet, buy without the competition from other buyers pushing prices up in a hot market, buy for the long term, and buy without the frenzy for long term value. Sun Valley offers great value compared to other mountain resorts, at least for now before our new hotel opens and our new flights gets a foothold. Yes, there is uncertainty now but taking risks can lead to rewards. The election will be over soon!