What do the mid-term elections mean in regards to real estate you ask? Let’s play out a few scenarios that should make the picture clear as mud.
The House of Representatives stays Republican as well as the Senate. This would mean we stay on the same trajectory we are on now. The Stock Market will go higher, the cost of goods will go higher and yes the prices of homes will go higher. Jerome Powell, the head of the federal reserve will be forced to raise interest rates to keep inflation in check and hovering around 2%.
Scenario # 2
The House of Representatives goes Democrat and the Senate stays Republican. This means “nothing gets done.” The house will pass bills that the Senate doesn’t approve and we are stuck in a stalemate. May slow down the economy, Wall Street will pull back some as will the cost of goods and along with that homes prices. This could be the start of a plateau in home prices, a decrease in homes sales, an increase in inventory as well as days on market. While the seller’s market of the last few years will be over it maybe a balanced market for a little while. Remember the balanced market is the shortest of all market cycles usually only lasting 6 months to a year before we head into a buyers market or seller’s market again.
Scenario # 3
The House of Representatives goes Democrat and the Senate goes Democrat. This means the Democrats will take aim at rolling back the Trump Tax cuts. This will be met with a sharp drop on Wall Street, employers will pull back as well as production. In housing, a market correction would be certain in this scenario. Not as bad as we all experienced in 2008-2011, but a sizeable 10-15% market correction is conservative.
Ex-Factors in the 2018 Mid-Term Elections
There are some ex-factors that could influence not only which party gets in power but would also affect the economy. For instance, trade is a big topic that could sway the election in favor of the Republicans but also change the trajectory of the economy. If the Trump administration comes up with an October surprise and announces a new trade deal with China…watch out. The Dow would take off, 4% GDP growth quarterly could be the norm, unemployment would see a new all-time low and voters would be inclined to vote Republican.
Other factors like instability overseas with Brexit and European Union, Greece and Italy’s financial problems or mid-east war could all contribute to investors making very conservative moves.
Too many scenarios yet to play out and we’ll just have to see how it goes. One thing for sure is this will not be a boring mid-term election. Too much at stake!
Dan Polimino is a Broker/Owner with the Colorado Dream House Team, Keller Williams Realty DTC. Contact the Colorado Dream House Team at 720-446-6325, firstname.lastname@example.org, coloradodreamhouse.com