I’m an economist: Here are my predictions for the housing market if Biden wins again

sdominic / iStock.com

sdominic / iStock.com

The 2024 election is approaching, and many Americans are wondering how the outcome could affect big life decisions like buying or selling a home.

If Biden wins again, what can home buyers and sellers expect for real estate over the next few years? The outcome can have a major impact on your finances and the decisions you choose to make about buying, selling or staying put in your current home.

Read more: I’m an Economist: Here Are My Inflation Predictions If Biden Wins Again

Find out: 4 genius things all rich people do with their money

To get their predictions, GOBankingRates spoke with economists Clifford Rossi, head of the Robert H. Smith School of Business, University of Maryland, and Aaron Cirksena, founder and CEO of MDRN Capital. Here are their thoughts on where the housing market could be headed with a Biden win.

Rich people know the best money secrets. Learn how to copy them.

Don’t expect any big changes for housing

If the president wins four more years in office, Cirksena does not foresee any seismic changes in the housing market. He expects Biden to simply maintain his administration’s existing priorities and approach to housing issues, rather than drastically changing course.

“A Biden win in 2024 likely means the housing market won’t see a dramatic change over the next few years,” Cirksena said. “The Biden administration has shown that they are willing to run with a high budget deficit to fund social programs like student loan forgiveness, green energy initiatives and health care spending, just to name a few.”

Learn more: I’m an Economist: Here’s My Prediction for Social Security If Biden Wins the 2024 Election

A seller’s market

Cirksena predicted that home sales inventories will remain low. Low inventory “means more buyers than sellers,” he said. “That would indicate a continued rise in house prices.”

In a seller’s market, buyers tend to face more competition and pressure to make quick decisions. This can lead to bidding wars and homes selling for much more than the asking price.

The Fed will keep interest rates high

If inflation continues to rise in Biden’s second term, the Federal Reserve could keep interest rates high to try to keep prices down. Mortgage rates are closely tied to the Fed’s actions, so this policy could have major implications for the housing market.

“The Fed will need to continue to be aggressive on interest rates to keep inflation under control,” Cirksena said. “No further rate hikes are likely, however holding steady at or near current levels would not be a surprise. If so, mortgage rates remain elevated and fewer people are motivated to sell as the pool of Americans with interest rates below 4% remains entrenched. Another plus for low inventory and higher prices.”

Higher rates mean homes would be less affordable for buyers. It would also limit the ability of current homeowners to refinance or sell, potentially leading to slower turnover and fewer homes on the market.

“I expect that getting inflation in line with the Fed’s 2% target rate will continue to be a slow process and so don’t expect any real improvement in interest rates until sometime in 2025,” Rossi said.

Higher mortgage rates are here to stay

For home buyers who have been hoping and waiting for those super low 3% mortgage rates to return, they may need to face the reality that those days are over.

“Probably one of the biggest 2025 conundrums affecting the housing market is where mortgage rates could go after the election,” Rossi said. “Whoever wins the election has very little impact on mortgage rates directly, although changes in inflation, driven by continued deficit spending, could mean mortgage rates are likely to stay around 6%-7% for a mortgage with a 30-year fixed rate, which would continue to drive many potential homebuyers out of the market.”

Cirksena also predicted that mortgage rates will stay where they are. He expects that buyers who have been waiting for rate cuts will have to accept that these rates are the new normal.

“Buyers who have been on the sidelines for a few years are coming back into the market, but again, inventory is limited,” he said. “Higher demand and lower inventory means higher prices remain stable.”

The low rates of recent years were most likely an anomaly. Rates of 6% to 7% are high compared to what we saw a few years ago, but they are actually more normal, historically speaking.

More from GOBankingRates

This article originally appeared on GOBankingRates.com: I’m an Economist: Here Are My Predictions for the Housing Market If Biden Wins Again

#economist #predictions #housing #market #Biden #wins
Image Source : finance.yahoo.com

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top