As of the second quarter of 2024, the average sales price of homes in the U.S. was $501,700, according to Federal Reserve data. In comparison, the average sales price was $340,600 just five years ago.
During certain times — such as in a recession — you may see dips in housing prices. That said, the market generally resets itself eventually and prices continue to rise over time. This is regardless of who happens to be president.
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That’s not to say that the president has no effect on the housing market. Certain policy changes or new regulations can influence things such as housing supply and demand, more affordable housing initiatives and interest rates. The president might not always have a direct impact, however.
If you’re thinking about buying a house next year — or in the next few years — you might wonder what role the presidential election will play in your purchase decision. GOBankingRates spoke with two financial planners, Joseph Favorito and Daniel Cabrera, to get their thoughts.
Here’s what a Kamala Harris presidency might mean if you plan to buy a house in 2025.
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The President Might Not Directly Affect the Housing Market (Much)
“I think the presidential election is likely to have little impact on the housing market and markets in general,” said Favorito, a financial planner and managing partner at Landmark Wealth Management.
Favorito believes that policies would play a greater role in the economy than the housing market specifically. The housing market and the economy are connected, of course, but Favorito said he views them more as “cousins” than “siblings.” In other words, the impact would be there, just less noticeable.
“Policy has a greater impact on the small business owner and consumer directly than it does on the national direction of home prices or the stock market,” Favorito said.
As for what truly impacts the housing market, Cabrera, a financial planner with expertise in real estate, said, “The factors that truly drive the housing market are interest rates, employment levels, consumer confidence and supply/demand.”
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Interest Rates Are a Primary Driver
The president can’t directly control mortgage interest rates, though the president can make his or her stance on monetary policies — which can impact rates — known. But the rates themselves can definitely impact your decision to buy property next year.
“If rates go up, it reduces home affordability and prices decline,” Cabrera said. “When rates drop, home affordability increases and prices go up. The Federal Reserve controls rates, not any politician.”
Rather, the Federal Reserve sets the effective funds rate — currently 5.33%. The Fed doesn’t actually set mortgage rates, but its policies — and the effective federal funds rate — can influence how much it costs to borrow money for a mortgage.
Mortgage rates have risen over the years. Recently, the average rate on a 30-year, fixed-rate mortgage has hovered around 5% to 7%. A decade ago, that same loan had a rate closer to 3% or 4%.
Both Favorito and Cabrera believe that historically low interest rates and the current rates have played a role in housing affordability today.
“Historically low mortgage rates and limited housing supply have fueled the recent seller’s market,” Cabrera said. “If rates rise or inventory opens up, we may see prices moderate.”
Supply and Demand Are Also Important
Whether or not Harris is elected, the current supply and demand in your local real estate market is more likely to impact your decision to buy.
“When there’s low housing supply and high demand from buyers, like now, it leads to rising prices,” Cabrera said. “If supply increases and demand drops, it puts downward pressure on prices. New home construction and existing home inventory drive supply, which politicians have little control over.”
The Job Market and Unemployment Rate Matter More
According to Cabrera, current wages and employment also significantly impact the housing market.
“When more people have jobs and incomes are rising, it boosts demand for homes and supports price growth,” he said. “Recessions where unemployment spikes cause demand and prices to drop. Again, politicians don’t directly control the job market or personal incomes.”
This was illustrated during the 2008 recession (aka the Great Recession), when housing prices and interest rates both fell. Those who could afford property could find great deals at that time — and those historically low rates. There hasn’t been a dip like that since.
“Strong employment supports housing demand,” Cabrera said. “So, the job market would need to remain stable or improve for a healthy 2025 market.”
Under the Biden-Harris Administration, there were talks of increasing the federal minimum wage to $15 for federal contracts and federal employees. In 2022, roughly 370,000 such individuals saw increases in their wages.
As for the national unemployment rate, it stood at around 4.3% as of July 2024. During the Great Recession, it went up to about 10%. In 2020, during the height of the COVID-19 pandemic, it rose to nearly 15%.
Housing Prices Could Decline
It’s possible that housing prices — and interest rates — could decline with a Harris election, but there’s no way to say for sure right now. If rates do drop, housing prices may go up as well, so homes wouldn’t necessarily be more affordable. It just depends.
“Housing tends to be very regional,” Favorito said. “Some areas that have had major price increases may see somewhat of a decline as the economy continues to slow.”
That said, Favorito doesn’t think housing prices will drop the way they did back in the 2008 era — regardless of who’s elected president.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m a Financial Planner: Here’s What a Kamala Harris Presidency Would Mean If You Plan To Buy a House in 2025