Over the past several months I’ve heard “real estate experts”, and even some brokers proclaim that Glendale real estate buyer’s will be sitting on the sidelines this year to see who is elected president. And many of them have proclaimed that every election year is a slow year for Glendale real estate. I’ve questioned the validity of those comments and look back to the 2004 election year. One of the hottest years in real estate ever. Many economists have done studies of the impact of a president on our general economy. They have determined that the President’s impact on the economy is generally negligible. As little as a 2-2.5% impact on the whole.
So why would people wait to buy a house base on the presidential election. Simple, procrastination. No one likes to make big decisions, so they make excuses. In reality election years are probably some of the best times to buy real estate in Glendale and the surrounding areas. As one of my friends says, “what’s bad for Wall St. is good for Main St.”. Meaning the real estate market. Often election years are filled with uncertainity. Wall St. does not like uncertainity so we see wild fluctuations in the market. Already this year the stock market is down quite a bit. Not much of this is downturn is necessarily attributable to the Presidential elections I’m sure. However, when the stock market begins to have problems there’s a flight to quality. Namely U.S. Treasury Bonds. When people start buying U.S. Treasury Bonds it drives the yields, or interest paid on the bonds, down. The 30 year fixed loan rates are tied to the 10 year treasury bond. So when the 10 year bond rates fall so do mortgage rates. Typically when mortgage rates fall the housing market booms. Bad for Wall St, good for Main St.
Right now we are seeing a rare series of events in the housing market, with interest rates dropping and housing prices falling. In the immortal words of John D. Rockefeller, “when there’s blood on the street, that’s the time to buy.” And right now there’s a lot of blood on Main St.