A recent academic study titled "Housing Performance and the Electorate" has shed light on the potential impact of rising home prices on the upcoming 2024 presidential elections. The study analyzed home prices and election results across every county in the continental United States over the past six presidential elections.

According to the findings, swing counties where home prices experienced significant increases in the four years leading up to an election were more likely to vote for the incumbent candidate. Conversely, counties that had poorer price performance were more likely to switch their vote to the challenging party.

The study's coauthor, Alan Tidwell, associate professor of finance at the University of Alabama, emphasized that individuals often vote based on their economic well-being. Considering that residential real estate is the largest asset class in the United States, it holds significant influence over voters' decisions at the polls.

Over the period between 2000 and 2020, 641 counties, comprising 23% of all counties in the U.S., switched their party preference at least once. In these swing counties, a 1% increase in home values in the four years preceding an election correlated with a 0.36% increase in the likelihood of voting for the incumbent.

Interestingly, even if a county did not vote for the incumbent in the previous election, a 1% increase in home prices raised the likelihood of switching their vote to the incumbent in the upcoming election by 0.19%. Furthermore, the study found that the relationship between home prices and voting behavior was strongest when home values increased the most in the year just before an election, particularly if the incumbent party was running a repeat candidate.

Eren Cefci, the lead author of the study and assistant professor of finance at Austin Peay State University, explained that swing counties were chosen for analysis because they exhibited the most sensitive voting behavior to changes in home values. He highlighted that with 77% of counties retaining their voting preference over the six election periods, they do not typically react to economic factors.

The study's findings have implications for the 2024 presidential race, especially considering that national home values have surged by over 45% compared to four years ago, according to data from the Freddie Mac House Price Index. Of the seven swing states in the upcoming race, four—North Carolina, Georgia, Wisconsin, and Arizona—have witnessed home price increases exceeding the national average within the past four years. Notably, Georgia and North Carolina have seen prices rise by over 60% since 2020.

While the study implies that the rise in home prices could favor the incumbent in swing counties, Cefci cautioned that voters consider numerous factors when assessing their choices in an election, including the overall economy.

It remains to be seen whether the positive fortunes of homeowners, driven by soaring home prices, will offset the concerns shared by a majority of Americans. Recent polls have shown that less than 40% of Americans believe President Biden will positively impact the overall economy, and a record-low 21% of respondents believe it is a good time to buy a house. Additionally, 70% of respondents expect housing prices to continue their upward trajectory.

High home prices present a challenging landscape for President Biden, as prospective homebuyers now require an additional $50,000 to afford a home compared to pre-pandemic times. Moreover, the country currently faces a shortage of 2 million to 7 million homes, allowing prices to remain elevated. In a study commissioned by Redfin, almost two-thirds of homeowners and renters expressed negative sentiments about housing affordability and its impact on the economy.

As the 2024 presidential campaign unfolds, the influence of rising home prices on voter sentiments and the overall election outcome will undoubtedly be closely observed.