The results from the tight general election in the United States are unlikely to significantly change the course of the ongoing housing recovery, at least for the time being. Such is the view presented by an article published by CNBC on the eve of the general election. Taking a historical look at home prices tracked and compiled by the benchmark Standard & Poor’s Case/Shiller Home Price Index, the reelection of President Barack Obama is bound to lift home prices, but at a slight rate of increase.
Speaking for S&P, David Blitzer explained that median home prices dipped by almost one percentage point during the administration and failed reelection bid of the incumbent George H.W Bush. When former President Bill Clinton was reelected in 1996, median home values appreciated by two percent –an increase that pales in comparison to the run-ups experienced during the free-for-all housing bubble of the early 21st century.
Incumbency Does Not Guarantee Prosperity
The S&P Case/Shiller Home Price Index has seen some ups and downs during the first term of President Obama’s administration, but the most significant increase took place during the most recent quarter: 2.6 percent. This most recent price increase is consistent with consumer confidence, which has been on the rise since early 2012.
While there is a strong chance that the reelection will signal future appreciation of median home values, there is still a high number of underwater mortgages to consider. Almost 213 percent of all mortgages in the U.S. are currently worth more than the properties they encumber. That means that more than 10 million American homeowners are in a negative equity situation. Another 2.3 million have only about 5 percent equity in their homes, and it will take more than political hope to lift those property values higher.
Regional Markets Show Promise
The reelection will certainly inject optimism in some sectors of the economy, but the recovery of the housing market is expected to continue at a regional level. The housing markets that have seen the most appreciation during President Obama’s first term are San Francisco, the District of Columbia, San Diego, Boston, Phoenix, and even Detroit.
Even if not all housing markets are enjoying the fruits of recovery, real estate consumers have been hopeful on the run-up to the reelection. According to the October National Housing Survey compiled by Fannie Mae, 37 percent of respondents expect that home values will appreciate in 2013.