Presidents, Real Estate, and Consistency

November 07, 2024 | Andrew Taylor, Associate Research Analyst

With the 2024 presidential election in the books, investors have now turned their focus to what the incoming Republican administration might mean for the performance of various asset classes. As it relates to the real estate space, the Trump victory did lead to a subsequent swing in both mortgage rate levels and the prices of housing-related equities, which are highly rate-sensitive. To that point, the average rate on a 30-year fixed mortgage climbed 9 basis points yesterday to more than 7.1% and housing stocks dropped, with home builders and materials companies like Lennar, D.R. Horton, and Home Depot down more than 3% during yesterday’s trading session.

While it is too early to forecast the impact that the new administration will have on commercial real estate specifically, readers should note that returns of the NCREIF Property Index, which tracks private real estate owned by institutional investors, have been nearly identical across Democratic and Republican administrations throughout history. Specifically, the index has posted an average annual return of roughly 8.7% under each party dating back to the 1970s. This consistency suggests that real estate performance is more closely aligned with economic cycles, long-term fundamentals, demographics, and property demand than it is with the political landscape.

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