Presidential elections shape economics in the United States, including residential real estate. While not directly tied to buying and selling homes, the effects of presidential policies on interest rates, tax laws and market confidence reverberate through the real estate industry.

Understanding how elections affect the market is essential for advising clients, whether they’re buyers, sellers or investors.

The 1970s was a challenging decade for real estate with high inflation, rising interest rates and stagnant growth. The presidency of Jimmy Carter saw inflation reach double digits. By 1980, mortgage rates climbed to nearly 18 percent, pushing many prospective buyers out of the market. Sellers struggled with decreasing property values. Real estate firms focused on markets less sensitive to interest rates, such as commercial properties and cash buyers.

The election of Ronald Reagan in 1980 marked a shift toward economic deregulation. The Reagan administration focused on reducing inflation through tight monetary policies. As inflation fell, interest rates came down from record highs, making housing more affordable again.

Real estate boomed during the 1980s, particularly in commercial real estate and high-end residential properties. Real estate brokerages benefited from increased activity as more buyers entered the market, drawn by decreasing mortgage rates and the prospect of more  accessibility.
The Tax Reform Act of 1986 eliminated some tax shelters for investors, but stabilized the broader housing market.

The 1990s were marked by economic growth, low inflation and decreasing interest rates under the Bill Clinton administration. The 1994 election, which brought in a Republican-controlled Congress, led to bipartisan efforts to balance the federal budget, resulting in sustained economic stability. This era saw more stable mortgage rates and increased homeownership.

The real estate market saw growing demand for housing, spurred by economic growth and a strong labor market. New construction flourished, particularly in suburban areas, and the market for real estate services expanded. The tech boom contributed to increased demand for office space, driving growth in commercial markets.

Under the presidency of George W. Bush, the early 2000s saw significant changes in the real estate market. Deregulation in the financial industry — combined with low interest rates and easy access to credit — fueled a housing bubble. From 2000 to 2007, housing prices and real estate activity surged. This growth proved unsustainable. By 2008, the housing bubble burst, leading to the worst financial crisis since the Great Depression. The subprime mortgage meltdown led to a collapse in home prices, widespread foreclosures and a drastic reduction in home sales.

Under the Bush and Barack Obama administrations, the federal government implemented rescue measures, including bailouts and housing market stimulus programs. The late 2000s and early 2010s were a time of recovery marked by distressed property sales and a focus on helping clients navigate the aftermath of the crash.

The 2010s began with a slow recovery from the Great Recession. The Obama administration continued efforts to stabilize the housing market. The Dodd-Frank Act introduced more stringent regulations on mortgage lending. Home prices and sales gradually increased through the decade.

This recovery period brought both challenges and opportunities. Foreclosures and short sales remained a significant part of the market in the early 2010s.
By mid-decade, the housing market stabilized. Lower interest rates and a recovering economy fueled demand for residential and commercial properties.

The later years of the decade under the Donald Trump administration saw significant tax reforms, including the Tax Cuts and Jobs Act of 2017. While the act lowered corporate tax rates and boosted commercial real estate, it also limited deductions for state and local taxes.

The election of 2020 that brought President Joe Biden to office came at a time of unprecedented challenges for the real estate market due to the COVID-19 pandemic. The housing market initially experienced a dramatic slowdown. But record-low interest rates and a shift to remote work eventually led to a housing boom in 2020 and 2021. Many Americans sought larger homes and moved to suburban or rural areas, driving up home prices.

Biden administration housing policies have included efforts to address affordability, stimulate new construction and provide relief to renters and homeowners affected by the pandemic.

Rising inflation and the Federal Reserve’s subsequent interest rate hikes in 2022 and 2023 led to higher mortgage interest rates, slowing down the housing market.

While no single election influences long-term market trends, each presidency has left its mark on the real estate landscape. From high interest rates in the 1970s to the housing boom and bust of the 2000s and pandemic-induced changes of the 2020s, the real estate market has had to adapt to an ever-changing environment.