By Wednesday morning, hundreds of thousands of ballots in swing states with nail-biting margins were still uncounted, and President Donald Trump had prematurely declared himself the victor in several of them, already threatening to drag the 2020 election results through the courts.
In other words, it can be a while before there’s an official winner—and that’s bad news for the fall housing market.
In a normal year, November would already be a slower month with people geared up for the holidays and kids settled well into the school year. In 2019, for example, there were roughly 28% fewer pending sales in November compared to the June peak, and average prices had fallen.
But 2020 is no ordinary year, and prolonged election uncertainty has the potential to interrupt a strong market still bursting with pent-up demand amid the pandemic.
“This does not help real estate,” said Bruce M. Goldstein, a Florida-based developer and co-founder of online marketplace BulkCondoDeals.com, who said even run-of-the-mill elections have a “chilling effect” on the market.
A cool-off in demand and sales couldn’t come at a worse time, during an unprecedented surge of activity this fall. Across the country, the pandemic has prompted people to reassess their living situations, spurring a flurry of home buying that began over the summer and has continued to defy the usual seasonal slowdown.
There were 34% more pending home sales in the four weeks ending Oct. 25 than there were during the same period last year, while white-hot demand drove the U.S. median home price to a record high of $322,375 during that period, 16% higher than a year ago, according to Redfin’s latest measure.
Even battered housing markets like Manhattan’s have begun to see an upswing in dealmaking, with a spate of trophy-home contracts pushing luxury sales volume last week to its highest level since the pandemic gripped the city, according to weekly figures from Olshan Realty.
And up until the election, strong demand persisted in South Florida, where home values are appreciating faster than appraisers can calculate, said Craig Studnicky president of Florida-based RelatedISG, a real estate market data firm.
“Single-family home prices are up 30%,” Mr. Studnicky said. “Appraisers are having a hard time keeping up.”
Nevertheless, a delayed conclusion to the U.S. presidential and Senate races could slow down home buying as buyers and sellers feel anxious about the outcome, industry experts said.
The razor-thin vote margins across half-a-dozen states, including Wisconsin, Michigan, Georgia and Nevada, have already led Mr. Trump to promote unsubstantiated claims of voter fraud. The president’s campaign manager said he would request a recount in Wisconsin after final poll numbers showed his Democratic challenger Joe Biden leading by roughly 20,000 of the 3.2 million votes cast there—that could reportedly take weeks.
Meanwhile, officials in Nevada, where Mr. Biden holds a miniscule lead, said the state wouldn’t release any more data until Thursday and continues to accept mail-in ballots over the next week. In North Carolina, another nail-biter with a competitive Senate race, mail-in votes are accepted through Nov. 12.
Ilyse Dolgenas has already seen the political uncertainty put off some luxury buyers, including a client from abroad with businesses in Senegal and Nigeria who was shopping for a Manhattan townhouse.
“He just put the brakes on it and said let’s see what’s happening with the election,” said Ms. Dolgenas, special counsel on the real estate team at international law firm Withers.
Fretting over the election is likely to have a greater impact on home shoppers who feel they have more at stake depending on the outcome, including the tax implications, future handling of the Covid-19 pandemic and other policy issues that hinge on which candidate is leading the country.
But not everyone is so concerned. In contrast to the townhouse buyer, a client from Northern Europe is “full steam ahead” on a penthouse condo that’s likely to be one of the most expensive sold this year in the Big Apple at nearly $100 million, Ms. Dolengas said.
“Younger folks are feeling like New York is New York; it will recover and they want to take their chances either way,” she said.
Second-home purchasers, and specifically foreign luxury buyers, may be particularly put off by a dragged-out election process, said Richard Swerdlow, who co-founded BulkCondoDeals.com with Mr. Goldstein. A full-blown constitutional crisis could alienate many foreign buyers who value U.S. stability, he said.
“If they don’t view the U.S. market as a safe haven then they’ll sell, and it will be repatriated,” Mr. Swerdlow said. The longer the election drags out, the worse it could be. “If this goes to the Supreme Court,” he said, “when does it end?”
Source: www.mansionglobal.com
