Slow and steady wins the race! | Guest Post
Despite the headlines and fears around a possible global economic recession, it’s the housing market that continues to be the bright spot in the midst of turmoil. Why? Because low interest rates will ultimately stimulate home buying demand, which will create appreciating home prices with low supply. Cheers for REALTORS®!
Interest rates remain at 3-year lows hovering between 3.64 percent and 3.75 percent (with 0.5 percent - one percent discount) supporting both buyer demand and pending home sales. In fact, mortgage purchase applications are up nine percent year over year despite the weekly variances due to changes in the interest rates. Pending home sales are also up nationally 2.5 percent year over year.
The rising demand will reaccelerate home price appreciation in the absence of more supply.
So please tell me what I am not supposed to like about low interest rates and continued appreciation? Better cash flow on real estate holdings and continued growth of value on my leveraged assets is what I have to look forward to. By the way, did you hear CoreLogic, the gold standard for appreciation, increased their forecasted year over year national appreciation from 5.4 percent to 5.8 percent? Right now, we are at 3.6 percent year over year looking backwards, which is exactly the historical average. Slow and steady wins the race!
However, we can’t simply ignore the economic slowdown around us.
The second quarter's final GDP landed at two percent, slower after a stronger 3.1 percent finish for quarter one. Manufacturing continues to slow down as it hit the lowest reading in more than ten years, and it’s the second consecutive month of contraction. Inflation is up. PCE, the Federal Reserve’s preferred measure of inflation, was reported flat and low at 1.4 percent. Yet, the CPI, which measures inflation from the consumer’s perspective, hit an 11-year high at 2.4 percent.
Did you hear what is expected to trigger the recession? NOT housing! It’s the Global Trade War AND a Stock Market Correction. Where would you rather have your money? I know where mine is, and where it’ll continue to be invested!
What else is happening in our Denver housing market?
The answer is... not much! Fall settled in as August to September numbers did what you’d expect - slower actives, new listings, under contracts, sold units and volume. The days on market went up by 1-day. However, year over year, we are holding our own. Active, new listings, under contract, sold units and volume, and median home prices are all up. Year to date our solds are up 0.66 percent, which is within the National Association of REALTORS®’ (NAR) prediction that 2019 will land one percent over 2018. Remember, 2018 was a great year. So even as we continue to hear more about global economic uncertainty or a recession, all I can say is - hop in, the water is fine!
If you want to protect your financial future, learn more about the current market, or simply want to buy your first home; you need to give me a call... because this is what our team does best!
The Rueth Team of Fairway Independent Mortgage Corporation
The views, opinions and positions expressed within this guest post are those of the author alone and do not necessarily represent those of the Denver Metro Association of REALTORS®. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
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