For many homeowners, election cycles can raise more than just political questions. Is now the right time to remodel? Should I wait out the political season for potential shifts in housing costs? Will the market stabilize after the election? With market fluctuations, potential policy changes, and economic ups and downs, it’s natural to wonder how election years might affect the cost of your next remodeling project.
At Lamont Bros. Design & Construction, we’ve guided Portland homeowners through every kind of market condition, including the unique challenges that election years can bring. Drawing from historical trends, we’re here to offer a clear perspective on the question: Do election years truly affect housing and remodeling costs?
In this article, we’ll explore insights from the past several election cycles, diving into how mortgage rates, consumer sentiment, and remodeling spending trends play a role. By the end, you’ll have a grounded understanding of how election years may (or may not) impact your remodeling plans, so you can make the best decision for your home.
The specific topics we’ll discuss include:
- Housing & Remodeling Cost Data
- How Elections Affect Housing & Remodeling Costs
- Mortgage Rate Trends in Election Years
- Should You Wait To Remodel?
Housing & Remodeling Cost Data
It should come as no surprise that costs in the remodeling industry are closely linked to the housing market.
To measure housing costs, we used the Federal Reserve’s data on the Average Sales Price of Houses Sold for the US (ASPUS), shown in the graph below.
For the cost of remodeling, we wanted to make sure to measure changes in both remodeling materials and labor. For this reason, we created our own Remodeling Cost Index by combining data from the Producer Price Index of Construction Materials and the Employment Cost Index for Construction Workers.
Remodeling Spending Trends Across Election Years
To understand how election years influence remodeling cost, we isolated data from the five quarters surrounding each election year—two quarters before the election (Q2, Q3), the election quarter itself(Q4), and two quarters following the election(Q1, Q2).
By focusing on election years from 2004 to 2020, we can see if these periods show unique remodeling patterns or if broader economic factors are the primary drivers of remodeling trends.
Visualization: Remodeling Spending Trends in Election Years
Below are two graphs illustrating housing and remodeling cost trends for the five quarters surrounding each major election year from 2004, 2008, 2012, 2016, and 2020. This view highlights whether spending patterns around these elections show consistent shifts or remain relatively stable compared to broader economic influences.
Key Findings from Election Years:
By isolating the trends in remodeling costs from the last 5 election years, we can see if remodeling activity reacted specifically to each election, or to other factors at play during the same time period.
2004 Election Cycle
During the 2004 election cycle, housing remodeling costs show a slight and steady increase, reflecting the stable economic environment of the time.
2008 Election Cycle
The 2008 cycle saw a drop in both housing and remodeling costs, likely due to the global financial crisis. Note that in both graphs, the downward trend begins before the Q4 election and continues its trend into the following Q1.
2012 Election Cycle
Housing and remodeling costs during the 2012 cycle were steady, reflecting economic recovery post-2008.
2016 Election Cycle
In 2016, housing and remodeling costs once again continued a stable trend, similar to previous non-recession cycles.
2020 Election Cycle
The 2020 election cycle was unique, with both housing and remodeling costs surging due to the economic strains caused by the COVID-19 pandemic. By early 2021, we begin to see the early onset of the rampant inflation that persisted through most of 2021 and 2022.
Key Takeaways from Housing & Remodeling Cost Data
Using regression tests to compare election year data to other years, we examined whether elections had a statistically significant influence on cost changes, controlling for factors like inflation and material prices.
Findings: The data showed no meaningful impact from election cycles on remodeling or housing costs. Instead, costs were affected by broader economic factors. For example:
- The 2008 election cycle saw a decrease in spending due to the financial crisis, not the election.
- 2020 experienced a remodeling surge, driven by the COVID-19 pandemic as homeowners adjusted their spaces, not election influences.
In stable periods like 2004, 2012, and 2016, both remodeling and housing costs remained steady, highlighting that market conditions and major economic events are the real drivers of cost changes, not election years.
What About Mortgage Rates?
Mortgage rates are another factor that many homeowners point to when it comes to remodeling costs during election years. We analyzed mortgage rates from the Federal Reserve Economic Data (FRED) database throughout the last 5 election cycles to see.
Key Findings on Mortgage Rates and Elections:
To understand if election cycles affect mortgage rates, we compared each election year from Q1 of the year before the election year through Q4 of the year after—three years for each election cycle.
Each line represents a different election year, beginning in 2004. The quarter in which the election occurred is marked with an X.
This graph shows a similar trend to those seen in the previous analysis of housing and remodeling costs. Elections seem to have no measurable effect on mortgage rates and instead reflect larger economic events rather than the elections themselves.
Furthermore, only in 2008 did we see mortgage rates continue to decline substantially past the election. In all other years, mortgage rates either stabilized or rose in the year following the election.
Should You Wait To Remodel?
Based on the data discussed here, waiting to remodel due to an upcoming election is generally not advantageous. Here’s why:
1. Election have no measurable effect on remodeling costs.
Our analysis found no statistically significant pattern in remodeling costs specifically tied to election years. Instead, remodeling costs tend to follow long-term trends influenced by factors like inflation, material prices, and labor availability.
Election years themselves showed no consistent impact on remodeling costs, suggesting that political cycles do not directly affect the expenses involved in a remodel.
2. Mortgage Rates Don’t Go Down After Election Years
Even if rates dip slightly around elections, this isn’t guaranteed and doesn’t directly reduce remodeling costs in a meaningful way.
What is noteworthy is that in the last 20 years, mortgage rates rarely decreased in the year following the election. Our analysis showed that broader economic factors play a far more substantial role in rate fluctuations than the election cycle itself.
3. The Cost of Remodeling Does Not Often Go Down
The Remodeling Cost Index shows that costs have steadily increased over time, with an average annual increase of about 3.27%.
Or, think about it like this. In the last 23 years, the cost of remodeling has increased year over year for 22 of those years. Only one year in the last 2 decades has seen a decrease in remodeling costs.
This trend suggests that postponing a remodel often results in higher costs later due to inflation and rising material and labor prices.
Think Now Is The Right Time to Remodel?
If after reading this article, you’re convinced that the best time to remodel your home is before costs continue to rise, you’re on the right track. Continue your research by downloading our free guide 6 Step Remodeling Guide to help you plan your project. In it, you’ll find industry advice from remodeling pros on how to have the most successful remodel possible.
If you’re ready to take advantage of today’s remodeling price and transform your home, click the button below to schedule a free meeting with a member of our design team. We’ll help guide you through the process of remodeling your home so you never have to face the challenges alone.