“Dan, what happens to the real estate market as we get closer and closer to the presidential election?” It’s a good question and a question that I get quite a bit. Of course, real estate doesn’t stop just because we’re electing a new president. People still need to move and relocate for jobs, health reasons or hardship, so homes do sell even though the nation could be nervous about who their next elected leader is going to be. This is my fourth presidential election cycle in real estate as I’ve been practicing for over 17 years. What I have found to be true over the years is that real estate doesn’t stop, but it certainly does slow down.
If I look back at my career, there is a trend you can clearly see about three months out from a presidential election. Right around August 1st home sales starting to slow considerably. The situation varies depending on the region of the country and has a lot to do with whether the market is a primary residence market or a secondary/vacation home market. I can tell you point blank from working in a secondary/vacation home market that no one needs to buy a second home just before the election. In fact, people spending money on that kind of luxury usually keep their hands in their pockets until they know who their elected officials are going to be. Translation, the market here on the island should be slow from August to the first week in November. However, with any market, there is opportunity.
For buyers – let’s say you’ve been thinking about getting a second home on the Big Island or picking up a short-term vacation rental as an investment property. Three months out from the presidential election would be an excellent opportunity to pursue that desire. You’re probably not going to be facing a lot of competition from other buyers. This means it’s unlikely you’re going to have a bidding war or have to pay over the asking price. In fact, I would go so far as to say you’re probably going to be able to purchase the property under asking price. Sellers will be more motivated to do a deal and are more likely to give concessions as well as negotiate on inspection items. Chances are that sellers who are in the market during this period need to sell and may be vulnerable. This is an opportunity.
For sellers – if you’re in the market during the three months leading up to the election, then you need to be prepared for a slow market. This means fewer showings and probably fewer offers. You also need to take wise counsel from your real estate agent and, whatever you do, don’t overprice the property. You’re already going to have more days on the market than the average listing so don’t make it worse by pricing the property too high. There’s a difference between a competitive price and a compelling price. During this period if you want to sell your property, you’re going to want to be in the latter category of a compelling price. What’s the difference? A competitive price is market value. It’s in line with what all the other comparable sales are saying. That’s probably not going to generate an offer for you. During the slower period, you’re going to have to have a “compelling price.” What I mean by that is when a buyer walks in, they take a look around at the location, the finishes/lay out, and then say to themselves, “At this price, I can’t pass this up.” That’s a compelling selling price and that’s what’s gonna be required to sell your house before the presidential election.
So now you are saying, “well Dan, what if I just hold off and wait. What if I just decided to sell my house after the presidential election.” Yeah, that’s fine. Many people are going to do that, and it will really depend on who gets elected to see which direction the country will go in. Let’s face it, both candidates have very different philosophies on where they intend to take the country, and this will have a major effect on the real estate market.
If you have more questions, or you want help on navigating this time of the year, then feel free to reach out to us here at The Hawai`i Team. We would love to talk with you and earn your business.
Dan Polimino is the owner of the Hawai`i Team in Kailua-Kona, Hawai`i. He and his team are the luxury residential experts for the Big Island. If you are thinking about buying or selling in Hawai’i, then please reach out to us at team@thehawaiiteam.com or call 808-913-0899.
