Twelve years ago when I worked at Charles Schwab, we watched the NASDAQ bubble burst ahead of the 2000 presidential election. As we moved past Election Day and into the silliness that followed, the running line on the phones was that the markets would stabilize once the election was figured out. It was such a good line that I kept on using it well into 2001, eliciting a wry chuckle in most cases.
Sometimes, if you don’t laugh you’d have to cry.
Speaking of crying, there was the real estate market of 2007 where everyone stopped buying homes. Everyone. The end of the year saw about 1,500 detached homes sell across all of Maricopa County. This was the time when we in this business would comfort each other, telling ourselves if you still had a credit rating above 525 you really weren’t trying too hard to stay in business.
Oddly enough, given the enormity of the financial crisis in September 2008, it seemed to have a comparably minor impact on the real estate market as a whole. There were some sub-markets seriously hit, particularly the retirement areas where those who would purchase winter homes watched their 401(k)s shrink and decided against buying (a lull which took more than a year to correct), but for the most part once lenders decided to lend after a fairly small window where they wouldn’t, the market marched on.
What drove the market in 2008, even through the financial crisis, was the concept of hope. Perhaps my memory is a little faulty but it seemed McCain was given about a zero percent chance of winning the election. What Obama represented to the masses was hope, optimism, the possibility of something better … in short, the kind of thing that really helps an industry driven on consumer confidence as much as any other factor.
Fast forward four years and as Election Day nears, unless my perception is entirely off, there’s not a great deal of hope or optimism out there regardless of who the winner might be. There hasn’t been anything from the Romney camp that will cause the masses to believe happy days are here again. And as for Mr. President … we’ve had a full alphabet soup of band-aids over the past four years – HAMP, HAFA, HARP – as well as a homebuyer tax credit which on its own, as some have argued, set back the real estate market recovery for more than a full year.
Quick aside – HAFA, which allows qualifying homeowners to receive up to $3,000 from the government when they short sell their home, is great for those homeowners. But I do have a bit of an issue with the idea of the rest of us picking up the tab for this. /quick aside
In general, the programs introduced by the president have helped some homebuyers but not necessarily as many as originally promised or hopes. Something’s better than nothing, but still the question after the past four years remains this: what is going to be sufficiently different over the next four years to give people reason for optimism, a reason to hope for a better economy, to believe their jobs are secure?
If so little has happened in the past four years why would another four under Obama be any different?
So many people are discussing this election in terms of choosing the lesser of two mediocre choices. Is that accurate? In the eyes of the beholder, perhaps. But here’s the larger issue. If people believe the next four years will be about the same, there’s no catalyst present in the election results themselves to change the current nature of the market. (Note – this doesn’t take into account anything other than the consumer confidence side of things; naturally, a change in interest rates or the unveiling of some new miracle program could alter the equation.)
And so, in and of themselves, as opposed to four years ago the outcome of this election is virtually meaningless.
Things could change. Maybe there will be something that comes up in the next two months that will get people more engaged with the real estate market than they have been, maybe there will be some sort of deus ex machina solution that flips everything on its ear.
But if you’re on the fence waiting to see what the real estate markets do come November, it could be as exciting viewing as Halley’s Comet in 1986.