After the sharp decline in the stock market on August 5, economists are concerned about what, if anything, will stabilize the market.
Some experts predict an upcoming economic downturn, suggesting that the Federal Reserve may step in by making a substantial adjustment to the benchmark interest rate. As previously reported by The Dallas Express, many advisors have already begun offering tips on what to do in the event of a recession.
Americans may wonder how the presidential election will impact policymakers and our finances and whether substantial purchases, such as a new home, should be avoided during election season.
Candy’sDirt interviewed Daniel Oney, PhD, research director for the Texas Real Estate Research Center at Texas A&M University, to obtain perspective on how the election could impact buyers’ trust in the real estate market.
Here is some of what Candy’sDirt uncovered:
With election season in full swing, we’re witnessing the good, bad, and ugly of the American political machine. Amid the chaos that is the American election cycle, many would-be home buyers find themselves hesitant to make sudden moves. Just days after a bleak job report and subsequent global stock market sell-off, some have put a pause on big purchases. But is a new home one of them?
To find out whether an election year affects buyers’ confidence in the housing market, we sat down with Daniel Oney, Ph. D. and Research Director for the Texas Real Estate Research Center at Texas A&M University. He had invaluable insight and advice for those looking to buy this election season.
Assessing Your Circumstances
While many are inclined to time the market or seasons, Oney believes the most important factor in purchasing a home is your own financial health.
“From time to time, some commentators raise the issue of timing a home purchase,” said Oney. “They may focus on seasons of the year, phases of a business cycle, or other frameworks. Whether to buy a house in an election year is another example. For the most part, these speculations make a fundamental mistake by approaching home ownership as if it is like day-trading the stock market.”
Oney believes purchasing a home should be much more personal. As this decision will affect you and your family alone, it’s important to project all those uncertainties inward. Put your own fiscal health under a microscope and focus on how you can make the best purchasing decision at the time.
“Homebuying decisions should always be based on the individual household’s circumstances and long-term capacity to afford and maintain the home,” said Oney. “When making this decision, it is better to ask questions like: What is our existing debt burden? How secure are our jobs and income levels? What other major expenses might we face in the next several years? A good rule of thumb is that if buying a home last year didn’t make sense, and the answers to these questions and general household circumstances haven’t changed, then this year is also a bad year to buy a home.”
Election Season Volatility Isn’t as Vicious as We Believe
While political pundits and the media class would love for you to believe presidential elections have the power to melt down our entire economy, historically this hasn’t been the case.
“For most people in most markets, it makes little difference whether it is an election year or not,” said Oney. “There is always financial uncertainty. Usually, macroeconomic forecasters make no adjustments in their forecasts regardless of who wins the election. The nature of U.S. politics is that there are seldom significant differences in long-term economic policies by major parties.”
As for the advantages of purchasing during an election season, there really isn’t much of an incentive either. Looking at the historical data, the influence, as Oney explains, is minimal.
“There is no evidence that buying decisions are better or worse in election years,” said Oney. “In Texas, based on presidential elections since 1996, the five-year appreciation in home value is the same for purchases in election and non-election years: 29%. So, from a pure investment perspective, timing hasn’t mattered much.”