With taxation and economic regulation in limbo, a presidential election year can equate to a moratorium on big investment.
Keeping in stride with historical trends, big corporations like Verizon have been cutting back on spending, and the Washington real estate market is in flux.
At the local level, effects on real estate are subtler, wide-ranging and case-specific.
Local broker John Bernazzani has held a license for the past seven elections and said buyers – particularly big investors who are buying on a want as opposed to a need basis – may be on the retreat right now.
“Real estate is one of the biggest financial moves people make,” he said. “So people hold back in election years, no matter the party affiliation, and there is generally less activity.”
It’s speculative, but the particularly polarizing 2016 election might have upped the stakes and shaken the market more than usual, said national housing economist Eliott Eisenberg.
“The fact that the two presumptive nominees are so far apart politically stresses everyone out. Everyone who has a choice holds back: Why invest when you don’t know what the tax policy will be?” he said.
“An expression people have is that the problem with Hillary Clinton is you know what you’re getting. The problem with Donald Trump is you don’t know what you’re getting. I think economically, (Clinton’s) agenda is not particularly pro-growth, and Trump is a complete wild card, but he also seems quite anti-growth.”
The past 10 presidential election years, starting with the election of 1976, saw notable declines in the number of building permits in La Plata County for single-family residences in 1980, 1988, 1996, 2000 and 2008. Yet, national recessions in the early ’80s, ’90s, 2000s and the Great Recession in 2007 could be contributing factors, and the overall count of permits – including commercial and multi-family residential – did not take any major hits. While presidential elections tend to rock the economy on a larger scale, local markets are somewhat insulated.
“The local markets are the local markets – they do their thing,” Eisenberg said.
Paul Beasley, president of the Home Builders Association of Southwest Colorado, agreed that Durango’s allure as a vacation and second-home destination will trump election wariness. “People are going to be cautious about the election and where whoever wins will take the country, but Durango is going to be protected from the broader economic influences,” he said. “People want to live here and will always want to live here.”
But buying patterns have changed in some markets: at Purgatory, sales suggest the demand has reshuffled, where buyers are more inclined to purchase a condo at the lodge right now than a $3 million mountain home.
Building practices for some local contractors have also temporarily changed amid the presidential campaign. Jim Sawyer of Jim Sawyer Construction has built in La Plata County for 20 years; the years when a president is on his way out have been cautionary ones.
That, combined with the last economic downturn and the probability of interest rates going up, has shifted his habits to building more custom homes and fewer spec homes, which are a risk when the market is volatile. For now, he’s more likely to build a lower-end house over a $500,000 one in Edgemont Highlands.
According to the Durango Area Association of Realtors, residential sales were up in the last election year, 2012, compared to 2011, but median prices were down. Jerome Bleger, president of the real estate group, said those statistics might point to a pre-election push to buy and sell before the next leader takes office.
jpace@durangoherald.com
