Happy New Year! With the New Year comes many things, and among them predictions. We won’t break out our crystal ball just yet – stay tuned for our predictions in February’s “Market Update and News.” This month, we would like to share with you a few things on our radar:
Wall Street and the Economy. Wall Street got spooked late last year, primarily by the President’s tariffs and the Federal Reserve’s actions. For perspective, the economy remains strong. Unemployment remains remarkably low, and the U.S. is still gaining jobs. Wages continue to rise. The Fed doesn’t hike rates if the economy isn’t doing well. And per Ken Fisher, founder of Fisher investments and a NY Times bestseller, even if all tariffs were collected, they would amount to only 2.5% of one year GDP growth – and most of these tariffs aren’t collected.
The Effect of the 2018 Election – the elections created elevated levels of uncertainty, particularly in our “political” area. Uncertainty isn’t good for consumer confidence, including home buyer confidence. Now that the elections were over, did confidence go up? In November, DC metro area home prices were stable (compared to November 2017) although price per square foot declined. Economists believe that a divided government will increase the likelihood of less government spending, but not until early 2020.
A National Real Estate Slowdown. There’s a common misconception that there’s a downward trajectory in national home prices, but that’s not the case. It’s the sluggishness of home price increases that we are watching. The Case-Shiller home price index measures the rate of home price change. The index dropped from +6.72 in March to +5.2 in September. This is a 29% decline, but it’s a decline in price growth – not a decline in prices. That said, the last time there was a loss of home price momentum of this magnitude was in 2014. In that year, many analysts believed – wrongly – that the real estate market was turning bearish.
As always, we’re watching these and other market factors closely. We know they affect you, whether directly or indirectly. If we can help you make sense of what this means for you and your specific situation – buying, selling, investing, or just staying in place – let us know. We’re here to help!