Housing & Economic Market Update
Posted on July 15, 2019 at 5:43 pm | Uncategorized
The real estate market is impacted by economic conditions on a regional and national level. Real estate professionals should closely monitor the economy and how it may affect the local markets they service. Senior Vice President and Chief Economist of California Association of Realtors Leslie Appleton-Young and Deputy Chief Economist Jordon Levine provided a housing market update/forecast this month that cited where the housing industry is from an overall economic stability standpoint and the possible direction of both markets going forward.
During a live webinar, Appleton-Young and Levine discussed the growth rate of the economy, which is expected to be about 2.4% through the end of the year. The country continues to experience economic expansion, which has lasted more than 10 years, and is the longest period of expansion in history. There is a direct connection between housing demand and economic growth so real estate professionals should keep an eye on this dynamic.
Bond rates are down as well as mortgage rates, and unemployment is the lowest it has been in more than 50 years. The Fed is keeping an eye on the Consumer Price Index (CPI) which has been below 2% and should be sitting at about a steady 2% level. There is uncertainty on whether there will be a Fed rate increase and there has been talk about rates going down. The Fed Fund Rate is currently a flat 2.5% with low overall debt and there appears to be more consumer debt than mortgage debt.
Housing inventory remains low through the second quarter of the year with 3.2 month of inventory and properties throughout the state remaining on the market an average of 18 days. Many prospective buyers have been discouraged by the new tax plan that limits much of the homeownership incentive by capping total itemized deduction at $10,000.00.
The panel believes that the ongoing discussions about a possible recession are coming from a viewpoint of historical average as opposed to huge fundamental in-balances in the economy that typically create conditions that lead to a recession. But housing affordability will continue to be a concern for the housing industry as a whole and a topic of discussion in political campaigns.
Blog Post by M.A. Williams