The issues that are centered around elections typically revolve around social issues, job growth, and global politics. Government policies that are put in place can also have a significant impact on real estate. Many people believe that the real estate cycle has matured and with the election around the corner, the impact could be heightened.
But will current real estate fundamentals strengthen further, or weaken after a new administration takes office in January?
The economy and the stock market are the leading issues that affect the fundamentals of the property market. And party affiliation doesn’t offer any easy clues as to which candidate might strengthen, or weaken it. Statistically, the POTUS’ party affiliation does not have a significant impact on U.S. equity markets. That being said, presidential races and volatility often go hand in hand. Elections are times of uncertainty that sometimes lead to volatility in many markets. For instance, the FTSE NAREIT All REIT index has dropped steadily during the past three months. A number of factors, some of which may be related to uncertainty around the presidential election and broader market volatility, have likely contributed to this weakening performance.
Interest rates are another concern. The upcoming election may have influenced the Fed’s recent decisions not to raise rates. Not raising rates has been beneficial to many borrowing to buy a home and has definitely perpetuated much of the growth in real estate in recent years since the Great Recession. Some say a rate hike is overdue and could occur after the elections in December, but few expect a rapid increase in interest rates.
The 2016 presidential race has already offered plenty of surprises. However, ongoing divisions in Congress will likely restrain the abilities of both the Democrats and Republicans to enact proposed policies that may affect real estate in any impactful way. This election may not have any significant effect on the real estate industry. Market volatility may subside after the election when much of the uncertainty is removed.
For most Americans, focusing on the long-term perspective is the most effective way to prepare for any volatility this election season. To do so, investors should focus on diversifying their portfolios with a mix of both traditional and alternative investments.
For more information on how you could earn higher yields while averting some uncertainty around the impact this election will have on the markets, visit our investment solutions page, email us at firstname.lastname@example.org or call us at 1-888-950-1143.