What Happens to the Property Market If Trump Loses the Midterms?

Summary

The video argues that a US midterm result alone is not a reliable predictor of house prices. Over the following 12–18 months, more important factors are borrowing costs, credit availability, employment and incomes, and whether property sales continue to complete.

Historical context

• In the 2018 midterms, Democrats gained 41 House seats and took control. US house prices rose 5.1% from year-end 2018 to year-end 2019. The presenter notes that this does not establish that the election caused the increase.
• After Republicans won the House 222–213 in 2022, US house prices rose about 6.5% from year-end 2022 to year-end 2023.
• These are only two examples, so they do not guarantee what will happen in another election. The presenter cautions against treating an election forecast as a property-market forecast.

How politics can affect housing

The proposed transmission chain is:

Election outcome changes expectations → expectations affect government-bond yields and lenders’ risk margins → mortgage rates and credit availability change → buyers’ borrowing capacity and demand change.

The video separates the process into four stages:

1. Election result
2. Proposed policy
3. Law passed
4. Policy implemented

Markets may react to the result or to expectations early, while house prices generally respond more slowly. A divided Congress may block or reshape new policies, but existing laws remain in place.

Possible paths for borrowing costs

• Relief: If the result leads markets to expect less inflationary pressure or government spending, bond yields and mortgage rates could ease. This could support demand if jobs and incomes remain firm.
• Continued pressure: Persistent inflation, political uncertainty, tighter credit, or weakening incomes could weigh on buyers and housing—even if bond yields fall. Lower yields are not automatically positive if they reflect recession fears.
• Little change: If the result is expected and policy expectations barely shift, markets may have a limited reaction.

The video says neither political party is inherently better for house prices.

US mortgage context and repayment example

• The average US 30-year fixed mortgage rate was 7.4% in mid-October. This was a survey average, not a rate every borrower would receive.
• Congress does not set mortgage rates. Lenders look mainly to longer-term interest rates, including US government-bond yields, and add a margin. The Federal Reserve sets its short-term policy rate independently of Congress.
• On a $600,000, 30-year principal-and-interest loan, estimated monthly repayments are about $3,600 at 6% and nearly $4,000 at 7%—roughly $400 more per month, or $4,700 per year, for a one-percentage-point increase.
• At the higher rate, a buyer with a fixed monthly budget can borrow less, reducing their purchasing capacity. Bank serviceability buffers may further constrain borrowing.
• Existing fixed-rate borrowers are not immediately repriced when market rates move; new borrowers and people refinancing feel changes first.

Australian housing context

• The Reserve Bank of Australia (RBA) can be affected by US policy through exchange rates, global bond yields, asset prices, and access to offshore funding. However, Australian mortgages are priced through local funding and lending markets, and expectations for Australia’s own cash rate remain especially important.
• A weaker Australian dollar could raise import prices and add to inflation pressure; a stronger dollar could ease some of that. The presenter cautions against predicting currency movements based on the election alone.
• The RBA had raised its cash rate by 0.25 percentage points to 4.6% on September 29. Lenders set mortgage rates above that benchmark.
• Australian national dwelling values fell 1.1% in September, leaving them 5.2% below the March peak. September home sales were about 21% lower year over year.
• The RBA meeting was scheduled for November 2–3. The presenter notes that its decision would come before US polls had closed, so it could not be a response to the election result.

Framework for assessing the result

The presenter recommends monitoring:

1. Expectations: Did investors change their views on spending, taxes, or political conflict, or was the result already priced in?
2. Mortgage rates and credit access: Track rates actually quoted to buyers and whether lenders are easing or tightening access to credit.
3. Jobs, incomes, and completed sales: Cheaper credit is more supportive when employment and incomes are secure; it is less helpful if rates fall because the economy is weakening.

A lasting housing-market shift would require borrowing costs to remain different for months, incomes to hold up, and more sales to complete. The presenter would not use the US result alone to call a boom or crash in either country.

Assets, instruments, and sectors mentioned

• US and Australian residential property and housing markets
• US government bonds and bond yields
• US 30-year fixed-rate mortgages
• Federal Reserve short-term interest rate
• RBA cash rate and Australian mortgages
• Australian dollar and exchange rates

No stock tickers, ETFs, cryptocurrencies, or individual companies are mentioned.

Disclosure

The presenter says they are not a financial adviser and are not recommending action on election night.

Presenter/source: Jason, associated with The Investor Accelerator; the subtitles themselves do not state the presenter’s name.