Philadelphia Real Estate in an Election Year: Should You Buy, Sell, or Wait?

Election years can be a confusing time for homebuyers and sellers. Should you sell your home now or wait until after the election? Is it a good time to buy, or should you hold off? Like many other cities in the U.S., Philadelphia's real estate market can experience noticeable changes during election years. Let's dive into how housing inventory, prices, and interest rates are influenced by the election cycle and explore what it means for you.

Is Philadelphia Dependent on Election Results?

When thinking about how elections impact real estate, cities like Washington, D.C., often come to mind. In D.C., changes in the administration can directly impact the housing market. Government workers and contractors tend to move in or out of the city depending on which party is in power.

Philadelphia’s market is a bit different. Our city’s economy isn’t as tied to federal politics. We’re more diversified, with strong education, healthcare, and finance sectors. That said, we're not entirely immune to the uncertainty that elections bring. Many buyers and sellers may feel nervous about potential changes in tax policies, interest rates, and economic stability.

Do Interest Rates Change During Election Years?

Yes, interest rates can change during election years, but not necessarily because of the election itself. The Federal Reserve adjusts rates based on the broader economic picture, including factors like inflation, unemployment, and overall economic growth. So, while rates might shift during an election year, these changes aren’t directly tied to the election but rather to ongoing economic management.

What Happens to Housing Prices and Inventory?

Typically, during election years, there’s a slight dip in home prices and inventory. This isn’t because of political parties or candidates—it’s mainly due to uncertainty. Many homeowners choose to "wait and see what happens" before listing their properties, leading to fewer options for buyers. This can slow down the market, causing homes to stay on the market longer, which may stabilize or slightly lower prices.

However, once election results are clear and things settle down, market activity usually picks up. Buyers who were previously hesitant often re-enter the market, leading to more competition and potentially higher prices.

Source: HUD, NAR

How Does the Current Housing Crisis Factor In?

Beyond election-related uncertainties, there's a more pressing issue: the national housing affordability crisis. Since the pandemic, home prices have surged, and mortgage rates have nearly doubled, pushing the monthly payment for a median-priced house from $1,000 to $2,250. Rent has also gone up by about 20%, making it harder for families to afford housing.

This crisis is making it tough for many people to buy or rent homes. Even in an election year, these affordability challenges could mean the usual market slowdown might be more significant since many buyers are simply priced out.

Could New Policies Make a Difference?

Vice President Kamala Harris recently proposed a set of housing policies that could significantly impact the market. Her plan includes tax breaks for developers to build more affordable housing. These incentives could help address the shortage of affordable homes and might counteract some of the typical slowdowns we see during election years.

By encouraging developers to build more affordable homes and providing tax credits for renovating existing ones, these policies could make it easier for more people to find homes they can afford. If implemented, these measures could create a more balanced market, easing the current supply crunch.

The Bottom Line

While the Philadelphia real estate market may not be as closely linked to election outcomes as some other cities, it still feels the impact during election years. Changes in interest rates and shifts in inventory levels can create some market volatility, often driven more by uncertainty than concrete factors. However, long-term trends like the affordability crisis and potential new housing policies will continue to shape the market well beyond any single election.

If you're thinking about buying or selling a home this year, consider both the short-term election-year uncertainty and these longer-term trends. It’s always a good idea to consult with a local real estate expert who can help you navigate these complex factors and make the best decision for your situation.

For more insights or to get personalized advice, feel free to reach out!

““More than anything, what typically affects the housing market in election years is the market’s reaction to the election results. If the market believes the party that wins the election will stimulate growth, then we could see positive effects on the overall economic outlook,” ”

— Jason Obradovich, chief investment officer at mortgage lender New American Funding