If you are one of the nearly 63% of American homeowners and care about your home equity growth, does it make a difference which party is in the White House?
Homeowners and real estate investors have had a rough ride following the burst of the housing bubble in 2007 primarily due to risky subprime mortgage practices. Consequently, the housing collapse caused the Great Recession of December-07 to June-09. When we cast our votes in November, is party affiliation of the next President a significant factor in advancing and maintaining steady housing market growth?
Democratic and Republican Presidents each have credentials to brag about: Unemployment rates have been lower at the end of each Democratic President’s term and income taxes have been lower at the end of each Republican President’s term. However, the fate of the housing market during each presidential term is quite different when we examine housing data:
In the past 40 years, Democratic and Republican Presidents have each served five terms in the White House. Average inflation-adjusted house appreciation per term under a Democratic President is 2.5% while under a Republican President, the average appreciation is substantially higher at 4.2%. On the other hand, houses depreciated twice during a presidential term when a Republican was in the White House (Reagan’s first term and George H. W. Bush’s only term). Under a Democratic President, houses depreciated only once (Obama’s first term). Republicans have scored the highest housing appreciation per a single term (George W. Bush’s first term). Democrats have registered most decline in house values per a single term (Obama’s first term).
To shed light on the complexity of the case, I add one more element to the mix: the lasting effects of policies. Each president’s policies cascade into the next administration, creating a massive puzzle to answer a simple question of who is actually accountable for what. The most recent example is the Great Recession when previous presidential policies created a depressed economic condition that required revitalization of the economy and housing market under Obama’s administration. The exact same argument can be made for every president who inherited policies of not just the previous president, but also the ones before. It is an incredibly difficult task to accurately measure and report what the economy is doing, let alone assign responsibility for its direction.
During election years, we tend to perceive every nuance in the stock market and every change in economic metrics as a direct result of the President’s policies. It is true that the U.S. President is arguably the most powerful person on the face of the planet and the macroeconomic, fiscal, and monetary policy choices of U.S. Presidents influence our financial being from our investment portfolios to our home values. In reality, however, the Congress, the Federal Reserve, long-standing laws, social factors, and the intertwined global economy arguably have just as much, if not more, control over our economy, and our house values, than any President regardless of her/his party affiliation.
When we vote for our presidential nominee in November, we should not base our decision solely on one single factor, i.e. our house appreciation and vote along any party line. There is no analytical correlation between house appreciation and party affiliation of the U.S. Presidents.
Data Sources: U.S. Federal Housing Finance Agency, Bureau of Economic Analysis
About Farshid Bondar
Farshid Bondar is a full-time sales associate of the Fonville Morisey Realty Lochmere office.
Farshid has a broad background in finance and engineering. By utilizing his experience from past careers, he is able to serve his clients as an advocate for their real estate needs ranging from contact preparation and negotiations to closing the transaction.
Farshid is a Cary resident, where he lives with his wife and daughter. In his spare time, he likes to explore Triangle greenways, hiking trails, and local lakes.
Farshid is a member of the Raleigh Association of REALTORS®, the North Carolina Association of REALTORS®, and the National Association of REALTORS®.
Fonville Morisey Realty has 11 sales offices, with over 850 associates and employees throughout the Greater Triangle region. FM offers mortgage, insurance, property management, title services, real estate education courses and relocation services through its divisions and partners. For more information about Fonville Morisey Realty, visit www.fmrealty.com.