Some call it the “blue wave,” others wonder if it was closer to a splash than a tsunami. However you see it, the midterm elections on November 6th captured Americans from both sides of the political spectrum for much of the fall. As new congressmen and congress women get ready for swearing in in less than a month, how did the election results affect our housing market?
The short answer is: we don’t know yet. Before new faces on Capitol Hill and their new policies come into effect, it’s all speculation at this point. But often speculations are what move markets – see exhibit A: the terrible week the Dow had on heels of trade war speculations. A latest survey found younger Americans were more likely to expect the “blue wave” before November 6th; however, they diverged on how this changing of the guards could affect the housing market.
According to the latest Q4 ValueInsured Modern Homebuyer Survey, conducted a week before the midterm elections:
41% of millennials predicted Democrats would take over the House majority in the midterms; 32% predicted GOP would keep House majority
47% of Gen-Xers predicted Democrats would take over; and 26% (a significant 21-point differential) predicted GOP would keep House majority
26% of millennials and 27% of Gen-Xers said they expected it would be too close to call or they could not predict the election outcome
In contrast, Americans aged 65+ were much more likely to predict differently; 24% predicted Democrats would take majority in Congress, while 45% expected Republicans to keep the majority
The generational differences were noteworthy. However, what really caught our eyes were the expected impacts on the housing market, and the attitudinal divergence among those who agreed on their election predictions.
Among the 41% of millennials who believed Democrats would win more seats in Congress, they split on how that election result would affect the housing market. 22% expected a Dem win to drive up the stock market as well as home prices, while 19% expected home prices to go down as a result of the “blue wave.”
Gen-Xers who agreed on election results also split on what the impact would be, but they split the other way. Among the 47% who expected a new blue majority, more believed the resulting impact would be lower stock and home prices, at 26%. 21% believed home prices would go up as a result of the new democratic-majority Congress. One possible explanation is that Americans do tend to become more fiscally conservative as they age, so Gen-Xers might be more cautious about what a new Democratic majority could mean for the economy and their home value.
It is important to stress that most Americans, including those who participate in surveys, are not political science or economics experts with accurate crystal balls. However, sentiments and expectations often strongly impact buying confidence and behaviors. As more Gen-X Americans are more cautious about housing futures after the midterms, it would be interesting to follow up and see if they become more hesitant to make bold housing decisions in 2019.