The housing market is one of the largest sectors of the U.S. economy, and with every election cycle, there’s always speculation about how a new or returning president might influence home values, mortgage rates, and overall buyer confidence. While the president can’t single-handedly direct the housing market, policies, economic priorities, and social shifts that come with each administration can impact everything from mortgage rates to property values. Let’s take a look back at how some key presidential elections have influenced the real estate market over the years—and make a prediction on what this year’s election might mean for housing.

The 1970s: Interest Rates on the Rise

The 1970s were a challenging time for homebuyers. As the economy struggled with inflation, interest rates began to climb significantly, and the Nixon and Carter administrations both faced serious economic struggles. Home affordability became more challenging as rates soared. By the end of Carter’s term, mortgage rates had climbed to nearly 20%.

Impact on the Housing Market: This era showed that economic policies addressing inflation and unemployment can have a direct impact on housing affordability, especially in terms of interest rates.

The Reagan Years: A Boom in Homeownership

When Ronald Reagan took office in 1981, he brought a new emphasis on economic growth and tax reforms that aimed to stabilize inflation and bring down interest rates. The result was a period of high homeownership rates. Under Reagan, the 1986 Tax Reform Act also introduced the mortgage interest tax deduction, which encouraged home buying.

Impact on the Housing Market: Reagan’s economic policies are often credited with sparking a boom in the housing market. This period illustrated how tax incentives and economic stability can influence homeownership.

The 2000s: The Housing Bubble and Economic Crisis

The early 2000s saw the housing market flourish under George W. Bush, with a homeownership rate of nearly 70%. However, lending standards became looser, allowing people to purchase homes they couldn’t afford. When the bubble burst in 2008, housing values plummeted, leading to the Great Recession. As Barack Obama took office in 2009, his administration focused on stabilizing the economy with the Housing and Economic Recovery Act and the Home Affordable Modification Program (HAMP), aimed at helping homeowners avoid foreclosure.

Impact on the Housing Market: This period demonstrated the risks of a housing market boom without regulatory oversight and how crises can lead to sweeping recovery programs and changes in lending standards.

The Trump Era: Tax Cuts and Low Rates

The Trump administration brought the Tax Cuts and Jobs Act of 2017, which impacted high-value home markets by capping the mortgage interest deduction and limiting deductions for property taxes. Meanwhile, interest rates remained historically low, further fueling the housing market. The COVID-19 pandemic brought unique challenges, but also an unprecedented housing boom as people sought more space and took advantage of record-low mortgage rates.

Impact on the Housing Market: Low interest rates drove demand, but new tax regulations affected some high-cost markets. This period reinforced how economic and tax policies, as well as global events like the pandemic, can influence housing in complex ways.

The Biden Administration: A Focus on Affordability

Under President Biden, the emphasis has been on making housing more affordable. Proposals have focused on increasing the supply of affordable housing, providing down payment assistance, and supporting renters. Rising interest rates in response to inflation control measures have tempered the recent housing boom. As a result, buyers have faced affordability challenges, though property values remain high due to low inventory.

Impact on the Housing Market: The Biden administration has shown how affordability measures and high-interest-rate environments can temper housing demand and influence price stability.

What Could the Upcoming Election Mean for the Housing Market?

With the upcoming presidential election just days away, many are wondering what impact it could have on the housing market. Several key issues are likely to come into play:

1. Interest Rates: The Federal Reserve’s approach to interest rates could shift depending on the administration’s economic priorities. While the Fed is independent, the administration’s stance on inflation, spending, and growth can influence its decisions. A candidate focused on growth and low-interest policies could encourage a more robust market, while inflation-focused candidates may prioritize higher rates for stability.

2. Housing Affordability and Supply: Both parties have shown interest in addressing housing affordability, but their methods may vary. A candidate focused on supply-side solutions (e.g., encouraging new construction) could help balance the housing shortage, while others may focus more on assistance for buyers and renters.

3. Tax Policies: Changes to capital gains taxes, property tax deductions, or the mortgage interest deduction could influence home-buying behavior. For example, lifting or adjusting current tax caps could increase demand in high-value areas, whereas a reduction in these benefits might slow the luxury market.

4. Investment and Regulation: A candidate supportive of real estate investors and landlords might lead to growth in rental housing markets, while others who focus on increased tenant protections could influence property management and rental policies.

Conclusion: The Market is Resilient, But Changes are Coming

While it’s natural to expect some market shifts following a presidential election, history shows us that the housing market is resilient and adaptable. However, depending on the outcome, we could see new policies affecting everything from interest rates to affordability. If the focus continues on economic growth and low rates, the housing market may thrive. Alternatively, measures to control inflation could mean continued higher rates but a gradual cooling of home prices.

In the end, regardless of election results, the housing market will continue to offer opportunities. Buyers and sellers should work closely with knowledgeable real estate professionals who understand the market trends and can help them navigate potential shifts in policy.