REAL ESTATE NEWS...Why it’s harder to sell your home in an election year

Can a looming election make it more difficult to sell your home? Yes—particularly if the contest is close.

In a paper published last year in the British Journal of Political Science, Princeton economist Brandice Canes-Wrone and her co-author Jee-Kwang Park, an assistant professor at Nazarbayev University in Astana, Kazakhstan, used data from Zillow.com to look at housing sales during 73 U.S. gubernatorial elections in 35 states from 1999 to 2006. They found that in election years, homes sales declined between two-tenths and three-tenths of a percent.

That might seem small, but the impact, they note, is comparable to “that of other, well-established influences on housing markets” such as a standard deviation decrease in per capita income growth.

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The likely cause, says Dr. Canes-Wrone, is uncertainty, the notion being that house hunters are more reluctant to buy if they’re unsure how an upcoming election will affect their financial fortunes.

Bolstering this contention, she observes, is the fact that the study found the election effect was especially pronounced in the case of competitive races. In elections where the winner received less than 55% of the vote, home sales fell by between a third and a half of a percentage point.

“The closeness of the election matters a great deal,” she says. “There is this average electoral effect, but really it’s being driven by these tight elections.”

In a separate analysis from 2012, real estate site Movoto uncovered a similar effect using data from the California Realtors Association to look at presidential elections. During election years, the analysis found, home prices rose by just 4.5%, while they rose by 6% and 5.3%, respectively, in the years before and after an election.

Drs. Canes-Wrone and Park likewise detected a slight price decrease in election years, but Dr. Canes-Wrone says she considers that finding less solid given the difficulty of determining whether the drop is due to demand-side effects (like buyer uncertainty) or increased supply.

In a survey of consumers the researchers conducted during the 2008 election, they did find the contest was weighing on the minds of would-be buyers.

“We found a link between the extent to which an individual believed the election would affect them personally and the likelihood of them delaying a house purchase until after the election,” Dr. Canes-Wrone says.