With the Presidential election finally over, I think it’s safe to say that half of America is excited to see change and the other half is concerned about what that change will bring.
This topic of change and uncertainty got me thinking about how Presidential elections have affected real estate markets over the years. It seemed like a pretty straightforward question, but as it turns out, the answer is not quite that simple. There are, however, a few particularly interesting points of data that are worth taking a look at.
What The Studies Say
A recent study looked at real estate sales data for the last 35 years and concluded that home values rose at a rate of 1.5% less during election years and then experienced a 1% boost the year after an election.
How Nashville Compares
So let’s take a look at how Nashville compares during this election cycle. Our latest article concerning Nashville’s real estate market showed that home values are up 11% YTD for 2016. In 2015, we saw a 10% increase in values. So our rate of increase for home values has actually increased during the election year, instead of decreasing. This information completely contradicts this popular study that spanned over 3 decades
This means that Nashville home values are outpacing this particular study’s data by 2.5%. And there’s even better news for homeowners. As mentioned earlier, according to the study, there is typically an additional 1% increase to home values the year after an election. This suggests that home values in Nashville should continue to increase to around the 12% mark in 2017.
So why is Nashville outperforming the study.
Well, it’s no secret that Nashville has one of the hottest real estate markets in the country right now. It has become a trendy city for millennials and an ideal retirement destination for baby boomers. Also, the job market, which caters to many different industries, is stronger than ever. Not to mention Airbnb has it listed as one of the most popular cities for tourism and you have a recipe for a city with explosive growth.
All of these factors combined lead to a huge surge in demand, which of course puts a strain on our already thin supply of homes. This in turn drives up property values.
With all that said, when I first started putting this article together, I was really hoping to find some concrete evidence of how the housing market is affected surrounding a Presidential election. Instead, what we see is that besides interest rates, regional factors like the local job market or supply and demand have a much stronger effect on the real estate market than who the next person to move into the White House is.
Keeping all this in mind, hopefully you feel more confident about the direction of Nashville’s real estate market no matter who you voted for.