The 2024 federal elections will be a major turning point for the United States, no matter which party emerges with greater control. The country’s real estate market has been in a downturn since 2020, and new federal policies from the next administration could right the ship. Investors should make the following preparations in the event of a Republican win.

Tips for Investing During an Election Season

Residential properties look like safer investments in 2024 as mortgage rates slowly decrease to normal levels.

First, it’s worth noting that presidential elections historically create uncertainty in the housing market, and property values tend to drop. This trend is most noticeable during hotly contested elections like this one. No matter the outcome, investors should expect market activity to slow down in the months preceding the November contest.

To demonstrate this point, a recent study from Nationwide found that 32% of investors believe the economy will enter a recession within 12 months if their preferred party doesn’t gain more power in the 2024 federal elections. Nearly half of investors believe the results will impact their portfolios more than their own market performance.

What are some safe investing strategies during election season? It’s crucial to think in the long term and resist emotional sales or purchases. Although the housing market tends to underperform during election seasons, it has always bounced back in the following years. Temporary market trends shouldn’t dictate your decision-making. 

Diversification is the name of the game during times of market uncertainty. Spreading your investments across different properties, industries, and locations can mitigate the risks of an underperforming local market. Your gains in one area can offset your losses in another, helping you ride out the election volatility.

For starters, residential properties look like safer investments in 2024 as mortgage rates slowly decrease to normal levels. Starter homes and listings in middle-income communities are showing the best market performance, especially in growing towns in California, the Northeast, the Midwest, and the Sun Belt. These thriving regions could be safe havens for investors in an otherwise volatile market.

The evidence for the residential investment resurgence is growing by the day. Mortgage applications are increasing weekly, aside from a handful of adjustable-rate mortgages. Fixed mortgages can give investors more stability in a recovering economy, and ARMs are too risky during such a high-stakes election year.

The market forecast for rental and commercial properties isn’t so clear. Although activity slightly increased in 2023, commercial real estate loans were still in the dumps due to inflation and high-interest rates. Inflation is projected to reach the Fed’s goal of 2% by the end of 2024 and help rental rates cool down, but election uncertainty may offset this improvement.

Due to the uncertainty around commercial properties, investors should prioritize shorter lease terms for now. Real estate investment trusts (REITs) should also be key parts of your portfolio in 2024 and beyond. They can help you hedge against high inflation and create a slow but steady income stream despite market volatility.

No matter which political party you vote for in November 2024, there is good news for all Americans looking to invest.

Implications of a Republican Victory

In the event of a Republican win, policy changes will ultimately determine how real estate investors should approach the market in 2025 and beyond. Looking back at Donald Trump’s first term, his administration followed many of the typical Republican policy positions — lower taxes, deregulation, and free trade. 

These policy positions tend to create economic growth, but nothing is guaranteed in the unstable post-COVID economy. A sudden change back to a fiscally conservative administration could undo progress from 2022 and 2023, increase inflation, and pressure the Fed into raising interest rates again.

In terms of specific policies, investors can expect a Republican-controlled government to backpedal on stricter bank capital requirements to promote more activity. Commercial real estate loans have been terrible in the last few years. A pull-back on capital hike efforts could result in banks giving more loans to ambitious investors.

Another area of concern is the oil market crisis, which has been fueled by the worsening Israel-Hamas war. For every $10 increase in the cost of crude oil, gas prices rise by 24 cents here in the U.S. This significantly affects the average American citizen’s budget and limits their real estate investing options. A Republican administration would support Israel, potentially escalating the conflict and raising gas prices even further.

A Republican victory would also create uncertainty around one crucial piece of real estate legislation — the Housing Supply Action Plan. This plan aims to expand financing for affordable housing and reduce zoning rules to allow for more construction. A Biden re-election would allow this plan to follow through, but a Republican win may take a different housing policy approach.

The 2024 election carries more weight than previous years, but a Republican victory wouldn’t be an earth-shattering result.

The Good News

No matter which political party you vote for in November 2024, there is good news for all Americans looking to invest. The U.S. economy has continued to grow regardless of which party holds the power. The stock and real estate markets have rallied in the year following an election since 1980. As the anxiety fades, market activity naturally ramps up.

Based on the last 40 years of election cycles, investors hold off on buying new properties until after the election when they know who’s in charge. Once they can envision where the country’s economy is headed, they start investing again. Don’t be surprised if you see a sudden spike in demand for various properties in 2025.

In other promising news, the odds of a recession dropped below 50% in 2023 for the first time since 2020. This projection takes into account both a Republican and Democrat victory. The economy has shown great resilience through the pandemic, so investors should be confident that it can handle a change of the guard in the White House.

Invest Rationally, Not Emotionally

American citizens go through the same cycle every election season. They become too emotionally invested in their preferred party, stop thinking rationally, and make poor investment decisions. Many people stop investing altogether because they worry about the other party winning.

The 2024 election carries more weight than previous years, but a Republican victory wouldn’t be an earth-shattering result. What matters is how investors behave before and after the votes are counted. Don’t do anything impulsive or reactionary. Instead, keep a level head and diversify your portfolio in preparation for any outcome at the polls.