What about the election? Does it affect real estate?
Well, it does.
Many factors affect the value of real estate. Among some of the top factors are interest rates, national debt, unemployment, wars around the globe, and the political climate of the country. This is mixed with the local stability of an area, growth in that area, and the prosperity of the citizens in the community. All these issues come together to make real estate a fascinating field.
To be able to understand the peaks and valleys, many factors must be considered. Here’s the good news. In the United States of America, we have a unique and wonderful opportunity afforded to the average citizen: land and home ownership. It is a well-known fact that most wealthy individuals have as their base real estate holdings that make up the strength of their economic standing. So where are we with these holdings? Many of us have been holding our breath through the seemingly endless political campaigning. I believe many who have been on the sidelines will reenter the market to buy and sell in 2025.
In 2024 we saw values hold almost steady in most areas, though adjustments were made, and overpriced properties just did not sell. We continued with high inventory, as far as the number of properties for sale is concerned. With investment properties, we saw a 30 to 50 percent drop in sales volume. However, the interest rate hikes did put a damper on these types of properties due to the fact it reduced the potential return on investment. (Traditional residential property – these are the “primary residence” homes – was not affected in our area as much as investment (commonly referred to as short term rentals).)
The good news is we have survived another heavily fought election. Whether you are excited that we have a Republican president or whether you are dismayed by the outcome, the election being over is good news for real estate in this next season. As I mentioned, many buyers have been waiting for a decision before making real estate purchases. Our expectation is that Interest rates should slowly continue a downward trend this next year. Many who have small businesses are more positive as they look towards deregulation and less government red tape. They expect this will give them more latitude to make important decisions regarding investment opportunities. One thing we can all agree on is that we live in a great country with unique opportunities for real estate ownership and wealth building and despite our differences we are still “better together.”
So, what are our conclusions?
If you have a home to sell, do not overprice it! If you are a seller, it’s important to understand it is a buyers’ market. Think about concessions and staging. These are things we haven’t had to think about for the last few years. Realize the buyers are still going to pay a higher interest rate so it’s necessary to consider offering closing cost concessions to help them find a win.
If you’re a buyer, the good news is you have lots of inventory to choose from and you can ask for concessions that you will likely get! Remember to be particular about what you buy and feel confident that now is a good time to invest!
