The Midterms Changed Washington. But Will They Change the Housing Market?

November 2026 | Lake Geneva & Walworth County Housing Market Insights

By Jade Goodhue | Broker/Owner, Legendary Real Estate Services

The midterm elections are over. Democrats are feeling more optimistic about the economy. Republicans are feeling less optimistic.

And somehow, overall consumer confidence barely moved.

Interesting.

But here's the question I think matters considerably more.

Will the election actually make it easier—or harder—to buy and sell a home?

Because political confidence is one thing. Financial reality is another.

Here’s the reality: mortgage rates are already elevated, household expenses are under pressure, and buyers have been more selective, so the housing market doesn't need another change in sentiment.

It needs something that changes the numbers.

So let's look beyond the election results and examine what could actually improve—or worsen—housing conditions heading into 2027.

The Election Changed Expectations. But Not Necessarily Demand.

And there's something important to acknowledge before we go any further.

Housing affordability was already under considerable pressure before voters went to the polls.

Under Republican control of the White House and Congress, Americans were contending with elevated mortgage rates, expensive groceries and gasoline, and rising costs for appliances, building materials, and home improvements. Some of these pressures were inherited, while others were compounded by trade policy, geopolitical instability, and persistent inflation.

So the election didn't create the affordability problem. It reflected, at least in part, an electorate already frustrated by the worsenedcost of living.

And a change in congressional control doesn't automatically reverse those conditions.

That's why the question isn't simply whether Democrats can deliver a different economic agenda. It's whether divided government can produce measurable improvements in household purchasing power—and ultimately, housing affordability.

Following the November midterms, Democrats gained control of both chambers of Congress, creating a divided government with President Trump remaining in the White House.

According to Morning Consult's post-election analysis, Democratic consumer sentiment increased approximately 6.5 index points, while Republican sentiment declined approximately 6.4 points.

Almost a perfect offset.

Overall consumer sentiment barely changed. But here's the more revealing finding: Despite the shift in political optimism, Morning Consult's broader measure of consumer demand showed no corresponding improvement.

That's an important distinction.

People can feel better about the country's direction without feeling financially prepared to make a major purchase.

And they can feel politically disappointed while remaining financially secure enough to buy a home.

Confidence can influence someone's willingness to purchase. But affordability determines whether the purchase actually makes financial sense.

That's why I'm less interested in which political party feels more optimistic and more interested in whether the election changes the underlying economics of housing.

And there are several ways it could.

1. The Iran Conflict: Could Lower Energy Prices Improve Housing Affordability?

One of the most consequential economic developments heading into the midterms has been the conflict with Iran.

The disruption to oil shipments and uncertainty surrounding the Strait of Hormuz have contributed to higher energy costs and volatility in global oil markets.

Now that the election is over, there may be additional political pressure to bring the conflict toward a resolution.

A Democratic Congress can influence military funding, conduct oversight, and challenge aspects of the administration's approach.

But Congress cannot independently negotiate a peace agreement or guarantee that global oil supplies return to normal.

And as of mid-November, the conflict's economic consequences haven't disappeared.

So what does this have to do with housing?

Quite a bit, actually.

Gasoline prices affect household budgets directly.

Diesel prices affect transportation, construction, agriculture, and the cost of delivering goods.

Higher energy costs can eventually show up in everything from groceries to building materials.

And when households spend more on necessities, they have less money available for housing.

But there's another connection: Energy

If energy prices decline sustainably, that could help ease inflationary pressure.

And lower inflation expectations can support lower long-term bond yields, which influence mortgage rates.

So a meaningful improvement in the energy situation could potentially benefit homebuyers in several ways:

• Lower household transportation and living expenses.
• Reduced pressure on construction and renovation costs.
• A more favorable environment for mortgage rates.

But the reverse is equally important.

If the conflict escalates or shipping disruptions persist, energy prices could rise again, putting renewed pressure on inflation and borrowing costs.

Here's the interesting possibility: Housing could become more affordable without home prices falling—simply because the other costs of owning a home improve.

That's a development worth watching.

2. Tariffs: Will Building and Renovating Homes Become Less Expensive?

Tariffs are another area where the election could have practical consequences.

But there's an important limitation.

A change in congressional control doesn't automatically eliminate existing tariffs. Much of U.S. trade policy operates through authority delegated to the executive branch.

Congress can introduce legislation, negotiate exemptions, conduct oversight, and attempt to change that authority. But significant policy changes may still require cooperation from the president—or enough congressional support to overcome a veto.

So the election creates the possibility of changes, not a guarantee.

For real estate, the impact is straightforward.

Tariffs can increase the cost of imported building materials, appliances, equipment, and other products used in residential construction and renovations.

And those costs matter to both buyers and sellers.

Consider a buyer comparing two homes.

One is move-in ready.

The other is priced lower but needs a kitchen renovation, new windows, and mechanical updates.

If renovation costs remain elevated, the less expensive home may not actually represent the better financial decision.

The same applies to sellers.

A homeowner preparing to list may discover that improvements needed to make the property competitive cost considerably more than expected.

And for builders, higher material and financing costs can make new construction less economically feasible.

That's particularly relevant in Walworth County, where the cost of building new homes influences the available housing supply.

If targeted tariff relief reduces construction costs, it could improve project economics and eventually support additional inventory.

But those benefits wouldn't necessarily be immediate.

A lower tariff doesn't automatically mean a lower retail price. Suppliers, manufacturers, contractors, and market competition determine how much of that savings reaches the consumer.

And if tariffs remain elevated—or increase—the pressure on construction and renovation budgets could continue.

3. Inflation: Lower Inflation Doesn't Mean Lower Prices

Here's a distinction that matters more than most political headlines.

When inflation declines, it usually means prices are increasing more slowly. It doesn't necessarily mean groceries, utilities, insurance, or other everyday expenses are getting cheaper.

And that's important because homebuyers don't make purchasing decisions based on mortgage payments alone.

They have entire household budgets to manage.

October's Consumer Price Index showed continued monthly increases in food, energy, and shelter costs.

So even if consumers become more optimistic about the economic outlook, that optimism doesn't immediately translate into greater purchasing power.

For buyers, the effect can be substantial.

A household may technically qualify for a mortgage but still feel uncomfortable committing to the payment when other expenses remain elevated.

And that distinction matters.

What a lender says you can afford and what you can comfortably afford aren't necessarily the same thing.

For sellers, this helps explain why some qualified buyers are becoming more selective. They aren't necessarily rejecting a home because they don't like it. They may be deciding that the financial commitment doesn't make sense relative to their other obligations and available alternatives.

If inflation eases and real household purchasing power improves, more buyers may become comfortable entering the market.

But if living costs continue outpacing income growth, affordability could remain strained even without another increase in home prices.

4. Mortgage Rates: Why Divided Government Doesn't Guarantee Relief

Now let's connect all of this to mortgage rates.

There's a common assumption that if inflation improves or the Federal Reserve lowers interest rates, mortgage rates should automatically follow.

Not necessarily.

Thirty-year mortgage rates are heavily influenced by longer-term bond yields, including the 10-year Treasury.

The 10-year Treasury yields reflect expectations about inflation, economic growth, federal borrowing, and the risks investors see ahead.

Divided government introduces two competing possibilities.

• On one hand, political constraints could limit some spending initiatives and encourage fiscal compromise.
• On the other, budget standoffs, uncertainty over federal borrowing, and disagreements about spending could increase volatility.

And with federal debt already elevated, investors' expectations about future deficits and inflation matter.

So even if short-term interest rates decline, mortgage rates could remain stubbornly high.

Or they could fall if inflation expectations ease and bond yields retreat.

The election may change the direction of fiscal policy. But it doesn't directly determine the interest rate a homebuyer will receive.

And that's why I'll be watching the bond market as closely as the political developments.

5. Are Buyers Actually Returning? The Early Numbers Are Mixed.

Now here's where we move from economic expectations to actual behavior.

According to the Mortgage Bankers Association's November 11 report, purchase mortgage applications increased approximately 8% during the week ending November 6.

That's encouraging.

But applications remained approximately 18% below the same period last year.

So while we saw a weekly improvement, buyer activity was still considerably weaker than a year earlier.

Mortgage rates had also eased, creating a possible financial incentive for some buyers to reenter the market.

Was that improvement driven by post-election optimism?

Lower financing costs?

Or a combination of factors?

We don't know yet.

And one week of application data isn't enough to establish a sustained change in housing demand.

But here's what makes this particularly relevant.

If mortgage rates decline and qualified buyers return faster than inventory grows, competition for desirable homes could strengthen before home prices meaningfully decline.

That's the scenario buyers need to understand.

Waiting for lower rates may improve financing costs, but it may also mean competing against more buyers.

On the other hand, if mortgage rates remain elevated and inventory continues growing, some sellers may face greater pressure to negotiate.

Neither outcome is guaranteed.

Which is why I pay attention to mortgage applications, pending sales, inventory, and actual transaction activity rather than relying on sentiment alone.

6. What Does This Mean for Lake Geneva and Walworth County?

Our local housing market adds another layer to the national picture.

In our October market update, Walworth County had approximately 3.43 months of inventory, while Lake Geneva was tighter at about 2.45 months.

Traditionally, those figures would still suggest a market favoring sellers.

But buyer behavior was becoming more selective.

Homes offering compelling value could still attract strong interest.

Others were sitting longer as buyers compared properties and questioned whether the asking price justified the investment.

And that distinction is important heading into 2027.

For Buyers: Your Opportunity May Be in the Negotiation, Not the Price Trend

If you're considering buying in Lake Geneva or Walworth County, improving affordability could help.

But lower mortgage rates aren't the only factor worth considering.

When fewer buyers are competing for homes, you may have opportunities to negotiate repairs, contingencies, closing terms, or the purchase price itself.

However, not every home with longer days on market has a motivated seller.

Some homeowners have substantial equity and enough financial flexibility to wait.

And desirable properties can still attract multiple offers.

So the real opportunity isn't simply finding a home that's been listed for a long time.

It's identifying where the asking price, property condition, competing inventory, and seller motivation create a genuine negotiating advantage.

And if you're evaluating a home that needs improvements, pay particular attention to renovation costs.

Tariffs, labor expenses, and material prices can materially change the economics of what initially appears to be a bargain.

For Sellers: Don't Mistake Improving Confidence for Improving Demand

If you're planning to sell in spring or summer 2027, the election may have improved economic optimism among some prospective buyers.

But that doesn't establish that more qualified buyers are ready to purchase your home.

What matters is whether demand actually strengthens in your price range.

Are pending sales increasing?

Is competing inventory growing?

Are comparable homes receiving offers?

And are buyers willing to accept current asking prices?

If buyer demand remains weak while inventory increases, sellers could face more competition and less negotiating leverage.

But if financing costs decline and buyers return, well-positioned homes may benefit from stronger demand.

The advantage comes from understanding which scenario is developing—and preparing accordingly.

Your home may be valuable. But value and the ability to sell within your desired timeframe aren't the same thing.

That's why pricing, condition, presentation, and timing need to be evaluated together.

7. Lake Geneva's Luxury Market: Financial Flexibility Changes the Equation

Lake Geneva's luxury and second-home market doesn't always respond to economic conditions the same way the broader housing market does.

Some buyers have substantial equity, cash, or other financial resources.

They're not necessarily making purchasing decisions based on every small change in mortgage rates.

But they may be sensitive to broader economic uncertainty, investment performance, or the opportunity cost of tying up capital in a property.

And they often have something equally powerful.

Time.

A buyer may want a lakefront home without needing to purchase one immediately.

They can wait for the right shoreline, view, condition, and price.

Sellers may have the financial flexibility to wait, too.

So even when both sides have the resources to transact, neither necessarily feels compelled to compromise.

That's why lower transaction volume doesn't automatically mean declining property values.

Scarcity can support value. But it doesn't guarantee urgency.

And in the luxury market, understanding financial motivation can be just as important as understanding comparable sales.

8. What Would Actually Change the Housing Market in 2027?

Here's what I'm watching.

Not whether Democrats or Republicans feel more optimistic.

But whether the economic conditions influencing housing affordability begin improving together.

A sustained reduction in energy prices could ease pressure on household budgets and inflation.

Targeted tariff relief could help reduce some construction and renovation costs.

Slower inflation and improved fiscal confidence could support lower long-term interest rates.

And if those developments translate into more qualified buyers entering the market, we could see stronger transaction activity.

But there's another possibility.

Energy prices remain volatile. Tariffs continue increasing costs. Inflation stays stubborn. Mortgage rates remain elevated.

In that environment, buyers may continue pulling back.

And if inventory grows faster than demand, sellers who need to move could face increasing pressure to adjust their expectations.

There's also a third scenario.

Buyers remain cautious, but sellers with substantial equity or favorable financing continue choosing not to sell.

Transactions remain slow, yet available inventory stays constrained enough to support prices.

That possibility shouldn't be overlooked.

Because a housing market doesn't change simply because fewer people are buying.

It changes when the balance between supply, demand, and the willingness to compromise begins shifting.

The Real Takeaway: What Changes the Math?

The midterm elections changed the balance of political power in Washington.

They changed how some Americans feel about the economic future.

But they haven't yet changed the fundamental mathematics of purchasing a home.

That will depend on what happens next with energy prices, inflation, tariffs, household income, and mortgage rates.

And here's the distinction I think matters most.

A housing market doesn't necessarily become more affordable because home prices fall. It becomes more affordable when the total cost of owning a home improves relative to what people can earn and comfortably spend.

That's the change worth watching.

Because political optimism may influence expectations.

But it's purchasing power, financial confidence, and the willingness of buyers and sellers to reach an agreement that ultimately determine what happens in the housing market.

The election changed Washington. Now we'll see whether it changes the numbers.

Whether you're considering buying or selling in Lake Geneva, Walworth County, or the surrounding Geneva Lakes communities, the national headlines only tell part of the story.

What matters is how these economic developments affect your specific property, price range, financial position, and timeline.

At Legendary Real Estate Services, we look beyond market averages to understand the numbers, the negotiating dynamics, and the opportunities that matter to your next move.

Make your next move… Legendary.