The 21st century has shown that American presidential elections are famously unpredictable. The seeming randomness of how voters choose their president has led pollsters, pundits, and amateur election analysts to examine every possible factor to improve their forecasting models.

Researchers from the Pamplin College of Business came up with a new theory about national elections. They thought that the performance of the country’s biggest asset class, residential real estate, might affect how people vote.

Boosting property values

According to this theory, homeowners would support policies or politicians they think would boost their property values. This concept, called the “homevoter” effect, was first introduced by Dartmouth College professor William Fischel in 2001.

The researchers looked at 30 years of data from the Federal Housing Finance Agency Housing Price Index. They studied how housing market trends at the county level influenced voter behavior in presidential elections. Their analysis showed that the state of the housing market does indeed impact how people vote in these elections.

The results show that counties with strong house price growth in the four years before an election are more likely to switch their vote to the incumbent party. Meanwhile, counties with poor house price growth in the same period are more likely to switch their vote from the incumbent to the challenging party.

“In layman’s terms, a county is more likely to switch to the incumbent and not switch to a challenger if real estate is doing well,” the researchers explain. “Election outcomes in ‘swing’ counties are particularly vulnerable to the local real estate economy.”

Positive returns

The most interesting finding in the research is what happened to home values in counties that switched their votes to the incumbent president. Counties that flipped their votes did not see positive returns in the next election cycle.

“We found that it is better, strictly in terms of residential real estate values, that we switch parties every four years,” the authors explain. “Counties are better off not chasing positive returns.”

So what insights can election forecasters draw from this research for the 2024 presidential election? Consider that Virginia’s housing performance index increased by 5% last year. If, over four years, residential housing returns in Virginia rose by 20%, there is a 12% to 17% higher chance that Virginians will vote for the incumbent president.

However, if the research holds true, this may not be the best move for “homevoters.”

“Over the 30-year period, our research has shown that the results ‘homevoters’ seek don’t necessarily turn out in their favor,” the authors conclude.