Traditional wisdom is that real estate prices and sales continue at a quick pace during an election year, but the rate of growth slows, historically, the year after a presidential election. This year has, seemingly, followed that pattern in the months leading up to the November vote, with most markets across the country experiencing robust growth.
But this is an unusual election year, to say the least!
The real estate market in Dallas remains “among the hottest in the country,” with an 8.3 percent year over year increase in the latest S&P Dow Jones Indices of rising home values. Only Portland, Seattle and Denver ranked higher. In Dallas, the good times extend to all segments of the market – including retail and commercial, apartment construction and leasing, high-rise condo development and sales, and traditional single family homes. The good times extend into surrounding suburban cities; other Texas cities, notably Austin, have experienced similar growth.
Effects of the Election
All expectations are that the good times will continue. However, analysts for months have been saying that the rate of growth will slow somewhat in 2017. Whether that will be due to the uncertainty of a new administration, expected interest rate increases, seasonal fluctuations or other factors remains to be seen. Matthew Gardner, chief economist for a Seattle luxury real estate firm, notes that Wall Street “nervousness” is reflected in real estate uncertainty, but he also concluded in July that we could expect a “robust” real estate climate through the end of the year.
Historically, interest rates remain relatively stable in the year following an election. In this election cycle, both Hillary Clinton and Donald Trump are seen as “pro-market” candidates, with the expectation that either one will be good for the economy, with changes beginning to be felt in 2018.
Peter Linneman, Chief Economist of NAI Global, expects that the election will “probably knock a quarter to a half of a percent off of GDP growth,” but that it will have minimal effect on both single family and commercial real estate. He believes that the economy’s slow recovery is, in large measure, the result of housing’s “underproduction” since 2010. The real effects of the election, Linneman believes, will become apparent only in 2018 and beyond. He believes economic recovery will continue despite political changes. “We are growing, building,” he says, “but not overbuilding.”
Prospects for Dallas
August was a particularly good month for Dallas, in terms of home prices, number of sales and days on market. It was so good, in fact, that many analysts are prompted to predict that 2017 will be another banner year in our area. We have little doubt that sales will continue to be brisk, and that prices will continue to rise, although we agree that the percentage increases may not equal the current records. The current market is strong; all indications are that it will continue to be a good time to buy or sell in the Dallas area. And, no matter how the election turns out, almost everyone agrees that we can expect little change for the next year.
And that’s the good news!