I’m not sure if you already knew this, but there is an election coming up. And it’s kind of a big deal.
Whether you talk to historians, economists, political scientists, medical health professionals, climate change experts, or your local dogcatcher, the general consensus is that the stakes of the U.S. presidential election between President Donald Trump and former Vice President Joe Biden have risen to unprecedented historical standards. The outcome is likely to reverberate across all three branches of the U.S. government and—considering the central place the U.S. holds in the global financial system—the entire world.
But the fate of American democracy and the future of the free world aside, what does this fulcrum election mean for multifamily real estate investments?
During previous elections, we’ve seen investors become a little jumpy. Election years create instability in the stock market, and that uncertainty has a way of trickling down to the housing market to influence attitudes among home buyers, investors, and sellers. The reason presidential elections tend to impact the real estate markets? Uncertainty makes people nervous, and nervous people don’t make rational decisions—they make emotional ones.
On my end, I’ve encountered plenty of investors who are putting their investments on hold until those fateful election results are released. Their reasoning is that there could be price drops depending on which candidate emerges victorious. I respect that: The election will be over soon (maybe not!) and taking a quick breather from investing won’t make or break them.
But certain other investors—myself and Karen among them—are advising our Alliance members to continue to invest. We’ve survived elections before, and we’ve never seen election results sway multifamily property values in any significant way. Indeed, we’ve found that multifamily prices have only continued to rise at a steady pace for nearly ten years. And as the economy improves and mortgage rates remain at all-time lows as predicted, the multifamily real estate market should stay stable before it ultimately grows sturdier in the long run.
Here’s the thing—much like timing your investment based on whether Jupiter and Saturn are aligned or Mars is in retrograde, timing your investment to the outcome of elections is unwise. Multifamily investment returns are not determined by planetary alignments or election results. They’re determined by many different factors—location, property management, supply and demand, etcetera, etcetera.
Whether Trump, Biden, or Kanye West ends up in the White House, the basics of real estate investing will still hold true. If you invest in a property in a good location with a well-reasoned business strategy to boost the cash flow, you’re probably going to do well in the long term (yes, even under President West).
Election outcomes and Jupiter-Mars alignment notwithstanding, if you want to learn more about factors that will influence your multifamily markets, Karen and I want to hear from you. Schedule a free jam session to talk investment strategy with us today.
In the meantime, enjoy Election Night!
Peter & Karen